Correlation Between Guggenheim High and Prudential Short-term

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

Diversification Opportunities for Guggenheim High and Prudential Short-term

0.22

Correlation Coefficient

Guggenheim High  Prudential Short-term

Modest diversification

The 3 months correlation between GUGGENHEIM and Prudential is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim High Yield and Prudential Short Term Porate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Short Term 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 Prudential Short-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Short Term has no effect on the direction of Guggenheim High i.e., Guggenheim High and Prudential Short-term go up and down completely randomly.

Pair Corralation between Guggenheim High and Prudential Short-term

Assuming the 90 days horizon Guggenheim High Yield is expected to generate 1.02 times more return on investment than Prudential Short-term. However, Guggenheim High is 1.02 times more volatile than Prudential Short Term Porate. It trades about 0.12 of its potential returns per unit of risk. Prudential Short Term Porate is currently generating about -0.01 per unit of risk. If you would invest  1,002  in Guggenheim High Yield on September 5, 2024 and sell it today you would earn a total of  10.00  from holding Guggenheim High Yield or generate 1.0% return on investment over 90 days.

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

Guggenheim High Yield  vs.  Prudential Short Term Porate

Guggenheim High Yield

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim High Yield are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Guggenheim High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Prudential Short Term

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prudential Short Term Porate has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Prudential Short-term 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 Prudential Short-term

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

The idea behind Guggenheim High Yield and Prudential Short Term Porate 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.