Correlation Between Guggenheim Energy and Aberdeen Japan

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

By analyzing existing cross correlation between Guggenheim Energy Income and Aberdeen Japan Equity, you can compare the effects of market volatilities on Guggenheim Energy and Aberdeen Japan 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 Energy with a short position of Aberdeen Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Energy and Aberdeen Japan.

Diversification Opportunities for Guggenheim Energy and Aberdeen Japan

0.0

Correlation Coefficient

Guggenheim Energy  Aberdeen Japan

Pay attention - limited upside

The 3 months correlation between Guggenheim and Aberdeen is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Energy Income and Aberdeen Japan Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Japan Equity and Guggenheim Energy 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 Energy Income are associated (or correlated) with Aberdeen Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Japan Equity has no effect on the direction of Guggenheim Energy i.e., Guggenheim Energy and Aberdeen Japan go up and down completely randomly.

Pair Corralation between Guggenheim Energy and Aberdeen Japan

If you would invest (100.00) in Guggenheim Energy Income on December 1, 2024 and sell it today you would earn a total of  100.00  from holding Guggenheim Energy Income or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Guggenheim Energy Income  vs.  Aberdeen Japan Equity

Guggenheim Energy Income

Risk-Adjusted Performance

Very Weak

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

Aberdeen Japan Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aberdeen Japan Equity has generated negative risk-adjusted returns adding no value to fund investors. Even with relatively invariable technical and fundamental indicators, Aberdeen Japan is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Guggenheim Energy and Aberdeen Japan

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

The idea behind Guggenheim Energy Income and Aberdeen Japan Equity 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.