Correlation Between Guggenheim Mid and Guggenheim Large

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

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

Diversification Opportunities for Guggenheim Mid and Guggenheim Large

0.95

Correlation Coefficient

Guggenheim Mid  Guggenheim Large

Almost no diversification

The 3 months correlation between Guggenheim and Guggenheim is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Mid Cap and Guggenheim Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Large Cap and Guggenheim Mid 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 Mid Cap are associated (or correlated) with Guggenheim Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Large Cap has no effect on the direction of Guggenheim Mid i.e., Guggenheim Mid and Guggenheim Large go up and down completely randomly.

Pair Corralation between Guggenheim Mid and Guggenheim Large

Assuming the 90 days horizon Guggenheim Mid Cap is expected to under-perform the Guggenheim Large. In addition to that, Guggenheim Mid is 1.25 times more volatile than Guggenheim Large Cap. It trades about -0.3 of its total potential returns per unit of risk. Guggenheim Large Cap is currently generating about -0.33 per unit of volatility. If you would invest  4,914  in Guggenheim Large Cap on October 9, 2024 and sell it today you would lose (597.00) from holding Guggenheim Large Cap or give up 12.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.0%
Values	Daily Returns

Guggenheim Mid Cap  vs.  Guggenheim Large Cap

Guggenheim Mid Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guggenheim Mid Cap 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 Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guggenheim Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental 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 Guggenheim Mid and Guggenheim Large

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

The idea behind Guggenheim Mid Cap and Guggenheim Large Cap 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.