Correlation Between Investor and Guggenheim Strategic

Can any of the company-specific risk be diversified away by investing in both Investor and Guggenheim Strategic 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 Investor and Guggenheim Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Investor AB ser and Guggenheim Strategic Opportunities, you can compare the effects of market volatilities on Investor and Guggenheim Strategic 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 Investor with a short position of Guggenheim Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investor and Guggenheim Strategic.

Diversification Opportunities for Investor and Guggenheim Strategic

0.87

Correlation Coefficient

Investor  Guggenheim Strategic

Very poor diversification

The 3 months correlation between Investor and Guggenheim is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Investor AB ser and Guggenheim Strategic Opportuni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Strategic and Investor 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 Investor AB ser are associated (or correlated) with Guggenheim Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Strategic has no effect on the direction of Investor i.e., Investor and Guggenheim Strategic go up and down completely randomly.

Pair Corralation between Investor and Guggenheim Strategic

Assuming the 90 days horizon Investor AB ser is expected to generate 3.11 times more return on investment than Guggenheim Strategic. However, Investor is 3.11 times more volatile than Guggenheim Strategic Opportunities. It trades about 0.14 of its potential returns per unit of risk. Guggenheim Strategic Opportunities is currently generating about 0.17 per unit of risk. If you would invest  2,633  in Investor AB ser on December 30, 2024 and sell it today you would earn a total of  412.00  from holding Investor AB ser or generate 15.65% return on investment over 90 days.

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

Investor AB ser  vs.  Guggenheim Strategic Opportuni

Investor AB ser

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Investor AB ser are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, Investor reported solid returns over the last few months and may actually be approaching a breakup point.

Guggenheim Strategic

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim Strategic Opportunities are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Guggenheim Strategic is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Investor and Guggenheim Strategic

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

The idea behind Investor AB ser and Guggenheim Strategic Opportunities 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.

Check out your portfolio center.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.