Correlation Between Guggenheim Risk and Global Opportunity

Can any of the company-specific risk be diversified away by investing in both Guggenheim Risk and Global Opportunity at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Guggenheim Risk and Global Opportunity into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guggenheim Risk Managed and Global Opportunity Portfolio, you can compare the effects of market volatilities on Guggenheim Risk and Global Opportunity and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Guggenheim Risk with a short position of Global Opportunity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Risk and Global Opportunity.

Diversification Opportunities for Guggenheim Risk and Global Opportunity

0.03

Correlation Coefficient

Guggenheim Risk  Global Opportunity

Significant diversification

The 3 months correlation between Guggenheim and Global is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Risk Managed and Global Opportunity Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Opportunity and Guggenheim Risk is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Guggenheim Risk Managed are associated (or correlated) with Global Opportunity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Opportunity has no effect on the direction of Guggenheim Risk i.e., Guggenheim Risk and Global Opportunity go up and down completely randomly.

Pair Corralation between Guggenheim Risk and Global Opportunity

Assuming the 90 days horizon Guggenheim Risk Managed is expected to under-perform the Global Opportunity. But the mutual fund apears to be less risky and, when comparing its historical volatility, Guggenheim Risk Managed is 1.08 times less risky than Global Opportunity. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Global Opportunity Portfolio is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  3,251  in Global Opportunity Portfolio on September 12, 2024 and sell it today you would earn a total of  467.00  from holding Global Opportunity Portfolio or generate 14.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Guggenheim Risk Managed  vs.  Global Opportunity Portfolio

Guggenheim Risk Managed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guggenheim Risk Managed has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Guggenheim Risk is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Global Opportunity

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global Opportunity Portfolio are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Global Opportunity showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guggenheim Risk and Global Opportunity

The main advantage of trading using opposite Guggenheim Risk and Global Opportunity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guggenheim Risk position performs unexpectedly, Global Opportunity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Global Opportunity will offset losses from the drop in Global Opportunity's long position.

The idea behind Guggenheim Risk Managed and Global Opportunity Portfolio pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.