Correlation Between International Emerging and Guggenheim Risk

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

By analyzing existing cross correlation between International Emerging Markets and Guggenheim Risk Managed, you can compare the effects of market volatilities on International Emerging and Guggenheim Risk 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 International Emerging with a short position of Guggenheim Risk. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Emerging and Guggenheim Risk.

Diversification Opportunities for International Emerging and Guggenheim Risk

0.33

Correlation Coefficient

International Emerging  Guggenheim Risk

Weak diversification

The 3 months correlation between International and Guggenheim is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding International Emerging Markets and Guggenheim Risk Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Risk Managed and International Emerging 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 International Emerging Markets are associated (or correlated) with Guggenheim Risk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Risk Managed has no effect on the direction of International Emerging i.e., International Emerging and Guggenheim Risk go up and down completely randomly.

Pair Corralation between International Emerging and Guggenheim Risk

Assuming the 90 days horizon International Emerging Markets is expected to generate 0.54 times more return on investment than Guggenheim Risk. However, International Emerging Markets is 1.84 times less risky than Guggenheim Risk. It trades about -0.27 of its potential returns per unit of risk. Guggenheim Risk Managed is currently generating about -0.38 per unit of risk. If you would invest  2,701  in International Emerging Markets on October 10, 2024 and sell it today you would lose (98.00) from holding International Emerging Markets or give up 3.63% of portfolio value over 90 days.

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

International Emerging Markets  vs.  Guggenheim Risk Managed

International Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Emerging Markets 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.

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 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 International Emerging and Guggenheim Risk

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

The idea behind International Emerging Markets and Guggenheim Risk Managed 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.