Correlation Between Guggenheim Risk and Sit Large

Can any of the company-specific risk be diversified away by investing in both Guggenheim Risk and Sit Large 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 Sit Large 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 Sit Large Cap, you can compare the effects of market volatilities on Guggenheim Risk and Sit Large 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 Sit Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Risk and Sit Large.

Diversification Opportunities for Guggenheim Risk and Sit Large

-0.04

Correlation Coefficient

Guggenheim Risk  Sit Large

Good diversification

The 3 months correlation between Guggenheim and Sit is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Risk Managed and Sit Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Large Cap 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 Sit Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Large Cap has no effect on the direction of Guggenheim Risk i.e., Guggenheim Risk and Sit Large go up and down completely randomly.

Pair Corralation between Guggenheim Risk and Sit Large

Assuming the 90 days horizon Guggenheim Risk Managed is expected to generate 0.77 times more return on investment than Sit Large. However, Guggenheim Risk Managed is 1.3 times less risky than Sit Large. It trades about 0.02 of its potential returns per unit of risk. Sit Large Cap is currently generating about -0.13 per unit of risk. If you would invest  3,163  in Guggenheim Risk Managed on December 29, 2024 and sell it today you would earn a total of  27.00  from holding Guggenheim Risk Managed or generate 0.85% return on investment over 90 days.

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

Guggenheim Risk Managed  vs.  Sit Large Cap

Guggenheim Risk Managed

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim Risk Managed are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. 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.

Sit Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sit Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Guggenheim Risk and Sit Large

The main advantage of trading using opposite Guggenheim Risk and Sit Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guggenheim Risk position performs unexpectedly, Sit Large 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 Sit Large will offset losses from the drop in Sit Large's long position.

The idea behind Guggenheim Risk Managed and Sit Large Cap 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.