Correlation Between Guggenheim Alpha and Nuveen Equity
Can any of the company-specific risk be diversified away by investing in both Guggenheim Alpha and Nuveen Equity 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 Alpha and Nuveen Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guggenheim Alpha Opportunity and Nuveen Equity Longshort, you can compare the effects of market volatilities on Guggenheim Alpha and Nuveen Equity 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 Alpha with a short position of Nuveen Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Alpha and Nuveen Equity.
Diversification Opportunities for Guggenheim Alpha and Nuveen Equity
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Guggenheim and Nuveen is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Alpha Opportunity and Nuveen Equity Longshort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Equity Longshort and Guggenheim Alpha 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 Alpha Opportunity are associated (or correlated) with Nuveen Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Equity Longshort has no effect on the direction of Guggenheim Alpha i.e., Guggenheim Alpha and Nuveen Equity go up and down completely randomly.
Pair Corralation between Guggenheim Alpha and Nuveen Equity
Assuming the 90 days horizon Guggenheim Alpha Opportunity is expected to generate 0.86 times more return on investment than Nuveen Equity. However, Guggenheim Alpha Opportunity is 1.17 times less risky than Nuveen Equity. It trades about 0.01 of its potential returns per unit of risk. Nuveen Equity Longshort is currently generating about -0.08 per unit of risk. If you would invest 1,918 in Guggenheim Alpha Opportunity on December 1, 2024 and sell it today you would earn a total of 4.00 from holding Guggenheim Alpha Opportunity or generate 0.21% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Guggenheim Alpha Opportunity vs. Nuveen Equity Longshort
Performance |
Timeline |
Guggenheim Alpha Opp |
Nuveen Equity Longshort |
Guggenheim Alpha and Nuveen Equity Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Guggenheim Alpha and Nuveen Equity
The main advantage of trading using opposite Guggenheim Alpha and Nuveen Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guggenheim Alpha position performs unexpectedly, Nuveen Equity 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 Nuveen Equity will offset losses from the drop in Nuveen Equity's long position.The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Guggenheim Alpha as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Guggenheim Alpha's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Guggenheim Alpha's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Guggenheim Alpha Opportunity.
Nuveen Equity vs. Diamond Hill Long Short | Nuveen Equity vs. Nuveen Equity Longshort | Nuveen Equity vs. Nuveen Equity Longshort | Nuveen Equity vs. Guggenheim Risk Managed |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |