Correlation Between Western Asset and Guggenheim Active

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

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

Diversification Opportunities for Western Asset and Guggenheim Active

0.67

Correlation Coefficient

Western Asset  Guggenheim Active

Poor diversification

The 3 months correlation between Western and Guggenheim is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Guggenheim Active Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Active and Western Asset 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 Western Asset Diversified are associated (or correlated) with Guggenheim Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Active has no effect on the direction of Western Asset i.e., Western Asset and Guggenheim Active go up and down completely randomly.

Pair Corralation between Western Asset and Guggenheim Active

Considering the 90-day investment horizon Western Asset is expected to generate 1.89 times less return on investment than Guggenheim Active. But when comparing it to its historical volatility, Western Asset Diversified is 1.36 times less risky than Guggenheim Active. It trades about 0.02 of its potential returns per unit of risk. Guggenheim Active Allocation is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,548  in Guggenheim Active Allocation on September 3, 2024 and sell it today you would earn a total of  24.00  from holding Guggenheim Active Allocation or generate 1.55% return on investment over 90 days.

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

Western Asset Diversified  vs.  Guggenheim Active Allocation

Western Asset Diversified

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Western Asset Diversified are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, Western Asset is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Guggenheim Active

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim Active Allocation are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Guggenheim Active is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Western Asset and Guggenheim Active

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

The idea behind Western Asset Diversified and Guggenheim Active Allocation 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.