Correlation Between William Blair and Guggenheim Risk

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

By analyzing existing cross correlation between William Blair Emerging and Guggenheim Risk Managed, you can compare the effects of market volatilities on William Blair and Guggenheim Risk 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 William Blair with a short position of Guggenheim Risk. Check out your portfolio center. Please also check ongoing floating volatility patterns of William Blair and Guggenheim Risk.

Diversification Opportunities for William Blair and Guggenheim Risk

0.28

Correlation Coefficient

William Blair  Guggenheim Risk

Modest diversification

The 3 months correlation between William and Guggenheim is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding William Blair Emerging and Guggenheim Risk Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Risk Managed and William Blair 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 William Blair Emerging are associated (or correlated) with Guggenheim Risk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Risk Managed has no effect on the direction of William Blair i.e., William Blair and Guggenheim Risk go up and down completely randomly.

Pair Corralation between William Blair and Guggenheim Risk

Assuming the 90 days horizon William Blair Emerging is expected to under-perform the Guggenheim Risk. In addition to that, William Blair is 1.04 times more volatile than Guggenheim Risk Managed. It trades about -0.4 of its total potential returns per unit of risk. Guggenheim Risk Managed is currently generating about 0.13 per unit of volatility. If you would invest  3,141  in Guggenheim Risk Managed on December 2, 2024 and sell it today you would earn a total of  141.00  from holding Guggenheim Risk Managed or generate 4.49% return on investment over 90 days.

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

William Blair Emerging  vs.  Guggenheim Risk Managed

William Blair Emerging

Risk-Adjusted Performance

Very Weak

Over the last 90 days William Blair Emerging has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Guggenheim Risk Managed

Risk-Adjusted Performance

Very Weak

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

Pair Trading with William Blair and Guggenheim Risk

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

The idea behind William Blair Emerging and Guggenheim Risk Managed 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.