Correlation Between Guggenheim High and Voya T

Can any of the company-specific risk be diversified away by investing in both Guggenheim High and Voya T 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 Voya T 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 Voya T Rowe, you can compare the effects of market volatilities on Guggenheim High and Voya T 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 Voya T. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim High and Voya T.

Diversification Opportunities for Guggenheim High and Voya T

0.68

Correlation Coefficient

Guggenheim High  Voya T

Poor diversification

The 3 months correlation between GUGGENHEIM and Voya is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim High Yield and Voya T Rowe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya T Rowe 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 Voya T. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya T Rowe has no effect on the direction of Guggenheim High i.e., Guggenheim High and Voya T go up and down completely randomly.

Pair Corralation between Guggenheim High and Voya T

Assuming the 90 days horizon Guggenheim High is expected to generate 1.5 times less return on investment than Voya T. But when comparing it to its historical volatility, Guggenheim High Yield is 1.97 times less risky than Voya T. It trades about 0.12 of its potential returns per unit of risk. Voya T Rowe is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,239  in Voya T Rowe on October 4, 2024 and sell it today you would earn a total of  587.00  from holding Voya T Rowe or generate 26.22% return on investment over 90 days.

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

Guggenheim High Yield  vs.  Voya T Rowe

Guggenheim High Yield

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guggenheim High Yield has generated negative risk-adjusted returns adding no value to fund investors. 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.

Voya T Rowe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voya T Rowe has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Voya T 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 Voya T

The main advantage of trading using opposite Guggenheim High and Voya T positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guggenheim High position performs unexpectedly, Voya T 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 Voya T will offset losses from the drop in Voya T's long position.

The idea behind Guggenheim High Yield and Voya T Rowe 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.