Correlation Between Guggenheim Styleplus and KINDER

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

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

Diversification Opportunities for Guggenheim Styleplus and KINDER

-0.57

Correlation Coefficient

Guggenheim Styleplus  KINDER

Excellent diversification

The 3 months correlation between Guggenheim and KINDER is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Styleplus and KINDER MORGAN ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINDER MORGAN ENERGY and Guggenheim Styleplus 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 Styleplus are associated (or correlated) with KINDER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KINDER MORGAN ENERGY has no effect on the direction of Guggenheim Styleplus i.e., Guggenheim Styleplus and KINDER go up and down completely randomly.

Pair Corralation between Guggenheim Styleplus and KINDER

Assuming the 90 days horizon Guggenheim Styleplus is expected to generate 1.4 times more return on investment than KINDER. However, Guggenheim Styleplus is 1.4 times more volatile than KINDER MORGAN ENERGY. It trades about 0.08 of its potential returns per unit of risk. KINDER MORGAN ENERGY is currently generating about -0.11 per unit of risk. If you would invest  2,399  in Guggenheim Styleplus on September 23, 2024 and sell it today you would earn a total of  95.00  from holding Guggenheim Styleplus or generate 3.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.38%
Values	Daily Returns

Guggenheim Styleplus   vs.  KINDER MORGAN ENERGY

Guggenheim Styleplus

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim Styleplus are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Guggenheim Styleplus is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

KINDER MORGAN ENERGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KINDER MORGAN ENERGY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KINDER 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 Styleplus and KINDER

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

The idea behind Guggenheim Styleplus and KINDER MORGAN ENERGY 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.