Correlation Between Guggenheim Directional and Chase Growth

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

By analyzing existing cross correlation between Guggenheim Directional Allocation and Chase Growth Fund, you can compare the effects of market volatilities on Guggenheim Directional and Chase Growth 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 Directional with a short position of Chase Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Directional and Chase Growth.

Diversification Opportunities for Guggenheim Directional and Chase Growth

0.77

Correlation Coefficient

Guggenheim Directional  Chase Growth

Poor diversification

The 3 months correlation between Guggenheim and Chase is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Directional Allocat and Chase Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chase Growth and Guggenheim Directional 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 Directional Allocation are associated (or correlated) with Chase Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chase Growth has no effect on the direction of Guggenheim Directional i.e., Guggenheim Directional and Chase Growth go up and down completely randomly.

Pair Corralation between Guggenheim Directional and Chase Growth

Assuming the 90 days horizon Guggenheim Directional Allocation is expected to generate 0.58 times more return on investment than Chase Growth. However, Guggenheim Directional Allocation is 1.73 times less risky than Chase Growth. It trades about -0.08 of its potential returns per unit of risk. Chase Growth Fund is currently generating about -0.12 per unit of risk. If you would invest  1,746  in Guggenheim Directional Allocation on December 30, 2024 and sell it today you would lose (71.00) from holding Guggenheim Directional Allocation or give up 4.07% of portfolio value over 90 days.

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

Guggenheim Directional Allocat  vs.  Chase Growth Fund

Guggenheim Directional

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guggenheim Directional Allocation has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Guggenheim Directional is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Chase Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chase Growth Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Guggenheim Directional and Chase Growth

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

The idea behind Guggenheim Directional Allocation and Chase Growth Fund 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.