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

0.56

Correlation Coefficient

Guggenheim Risk  Simt Large

Very weak diversification

The 3 months correlation between Guggenheim and Simt is 0.56. 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 is expected to generate 1.44 times less return on investment than Simt Large. In addition to that, Guggenheim Risk is 1.24 times more volatile than Simt Large Cap. It trades about 0.02 of its total potential returns per unit of risk. Simt Large Cap is currently generating about 0.03 per unit of volatility. If you would invest  2,536  in Simt Large Cap on December 29, 2024 and sell it today you would earn a total of  37.00  from holding Simt Large Cap or generate 1.46% return on investment over 90 days.

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

Guggenheim Risk Managed  vs.  Simt 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.

Simt Large Cap

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Simt Large Cap are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Simt Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .