Correlation Between Guggenheim High and Clearbridge Mid

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

Diversification Opportunities for Guggenheim High and Clearbridge Mid

0.73

Correlation Coefficient

Guggenheim High  Clearbridge Mid

Poor diversification

The 3 months correlation between Guggenheim and Clearbridge is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim High Yield and Clearbridge Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Mid Cap 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 Clearbridge Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Mid Cap has no effect on the direction of Guggenheim High i.e., Guggenheim High and Clearbridge Mid go up and down completely randomly.

Pair Corralation between Guggenheim High and Clearbridge Mid

Assuming the 90 days horizon Guggenheim High is expected to generate 9.65 times less return on investment than Clearbridge Mid. But when comparing it to its historical volatility, Guggenheim High Yield is 6.66 times less risky than Clearbridge Mid. It trades about 0.15 of its potential returns per unit of risk. Clearbridge Mid Cap is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  2,321  in Clearbridge Mid Cap on September 12, 2024 and sell it today you would earn a total of  278.00  from holding Clearbridge Mid Cap or generate 11.98% 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.  Clearbridge Mid Cap

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 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.

Clearbridge Mid Cap

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Clearbridge Mid Cap are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Clearbridge Mid may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Guggenheim High and Clearbridge Mid

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

The idea behind Guggenheim High Yield and Clearbridge Mid 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.