Correlation Between Guggenheim High and Great West

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

By analyzing existing cross correlation between Guggenheim High Yield and Great West Bond Index, you can compare the effects of market volatilities on Guggenheim High and Great West 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 High with a short position of Great West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim High and Great West.

Diversification Opportunities for Guggenheim High and Great West

0.06

Correlation Coefficient

Guggenheim High  Great West

Significant diversification

The 3 months correlation between Guggenheim and Great is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim High Yield and Great West Bond Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Bond and Guggenheim High 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 High Yield are associated (or correlated) with Great West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Bond has no effect on the direction of Guggenheim High i.e., Guggenheim High and Great West go up and down completely randomly.

Pair Corralation between Guggenheim High and Great West

Assuming the 90 days horizon Guggenheim High Yield is expected to generate 0.59 times more return on investment than Great West. However, Guggenheim High Yield is 1.69 times less risky than Great West. It trades about 0.15 of its potential returns per unit of risk. Great West Bond Index is currently generating about -0.03 per unit of risk. If you would invest  801.00  in Guggenheim High Yield on October 24, 2024 and sell it today you would earn a total of  14.00  from holding Guggenheim High Yield or generate 1.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Guggenheim High Yield  vs.  Great West Bond Index

Guggenheim High Yield

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim High Yield are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Guggenheim High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Great West Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Great West Bond Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Great West 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 High and Great West

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

The idea behind Guggenheim High Yield and Great West Bond Index 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.