Correlation Between Guggenheim Managed and Emerging Markets

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

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

Diversification Opportunities for Guggenheim Managed and Emerging Markets

-0.1

Correlation Coefficient

Guggenheim Managed  Emerging Markets

Good diversification

The 3 months correlation between Guggenheim and Emerging is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Managed Futures and Emerging Markets Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Equity and Guggenheim Managed 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 Managed Futures are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Equity has no effect on the direction of Guggenheim Managed i.e., Guggenheim Managed and Emerging Markets go up and down completely randomly.

Pair Corralation between Guggenheim Managed and Emerging Markets

Assuming the 90 days horizon Guggenheim Managed Futures is expected to generate 1.57 times more return on investment than Emerging Markets. However, Guggenheim Managed is 1.57 times more volatile than Emerging Markets Equity. It trades about -0.06 of its potential returns per unit of risk. Emerging Markets Equity is currently generating about -0.19 per unit of risk. If you would invest  2,080  in Guggenheim Managed Futures on September 22, 2024 and sell it today you would lose (32.00) from holding Guggenheim Managed Futures or give up 1.54% of portfolio value over 90 days.

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

Guggenheim Managed Futures  vs.  Emerging Markets Equity

Guggenheim Managed

Risk-Adjusted Performance

0 of 100

Very Weak

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

Emerging Markets Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emerging Markets Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Emerging Markets 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 Managed and Emerging Markets

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

The idea behind Guggenheim Managed Futures and Emerging Markets Equity 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.