Correlation Between Guggenheim Risk and Simt Large

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

Diversification Opportunities for Guggenheim Risk and Simt Large

0.91

Correlation Coefficient

Guggenheim Risk  Simt Large

Almost no diversification

The 3 months correlation between Guggenheim and SIMT is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Risk Managed and Simt Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt 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 Simt Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt Large Cap has no effect on the direction of Guggenheim Risk i.e., Guggenheim Risk and Simt Large go up and down completely randomly.

Pair Corralation between Guggenheim Risk and Simt Large

Assuming the 90 days horizon Guggenheim Risk Managed is expected to generate 0.89 times more return on investment than Simt Large. However, Guggenheim Risk Managed is 1.12 times less risky than Simt Large. It trades about -0.04 of its potential returns per unit of risk. Simt Large Cap is currently generating about -0.11 per unit of risk. If you would invest  3,413  in Guggenheim Risk Managed on December 4, 2024 and sell it today you would lose (92.00) from holding Guggenheim Risk Managed or give up 2.7% of portfolio value over 90 days.

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

Guggenheim Risk Managed  vs.  Simt Large Cap

Guggenheim Risk Managed

Risk-Adjusted Performance

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.

Simt Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Simt Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 Simt Large

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

The idea behind Guggenheim Risk Managed and Simt 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.