Correlation Between Basic Materials and Guggenheim Long

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

By analyzing existing cross correlation between Basic Materials Fund and Guggenheim Long Short, you can compare the effects of market volatilities on Basic Materials and Guggenheim Long 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 Basic Materials with a short position of Guggenheim Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Basic Materials and Guggenheim Long.

Diversification Opportunities for Basic Materials and Guggenheim Long

0.0

Correlation Coefficient

Basic Materials  Guggenheim Long

Pay attention - limited upside

The 3 months correlation between Basic and Guggenheim is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Basic Materials Fund and Guggenheim Long Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Long Short and Basic Materials 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 Basic Materials Fund are associated (or correlated) with Guggenheim Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Long Short has no effect on the direction of Basic Materials i.e., Basic Materials and Guggenheim Long go up and down completely randomly.

Pair Corralation between Basic Materials and Guggenheim Long

If you would invest  7,340  in Basic Materials Fund on December 23, 2024 and sell it today you would earn a total of  283.00  from holding Basic Materials Fund or generate 3.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Basic Materials Fund  vs.  Guggenheim Long Short

Basic Materials

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Basic Materials Fund are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Basic Materials is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Guggenheim Long Short

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guggenheim Long Short has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Guggenheim Long is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Basic Materials and Guggenheim Long

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

The idea behind Basic Materials Fund and Guggenheim Long Short 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.