Correlation Between Applied Finance and Guggenheim Market
Can any of the company-specific risk be diversified away by investing in both Applied Finance and Guggenheim Market 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 Applied Finance and Guggenheim Market into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Finance Explorer and Guggenheim Market Neutral, you can compare the effects of market volatilities on Applied Finance and Guggenheim Market 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 Applied Finance with a short position of Guggenheim Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Finance and Guggenheim Market.
Diversification Opportunities for Applied Finance and Guggenheim Market
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Applied and Guggenheim is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Applied Finance Explorer and Guggenheim Market Neutral in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Market Neutral and Applied Finance 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 Applied Finance Explorer are associated (or correlated) with Guggenheim Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Market Neutral has no effect on the direction of Applied Finance i.e., Applied Finance and Guggenheim Market go up and down completely randomly.
Pair Corralation between Applied Finance and Guggenheim Market
Assuming the 90 days horizon Applied Finance Explorer is expected to generate 14.69 times more return on investment than Guggenheim Market. However, Applied Finance is 14.69 times more volatile than Guggenheim Market Neutral. It trades about 0.07 of its potential returns per unit of risk. Guggenheim Market Neutral is currently generating about -0.02 per unit of risk. If you would invest 2,028 in Applied Finance Explorer on September 12, 2024 and sell it today you would earn a total of 340.00 from holding Applied Finance Explorer or generate 16.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Finance Explorer vs. Guggenheim Market Neutral
Performance |
| Timeline |
| Applied Finance Explorer |
| Guggenheim Market Neutral |
Applied Finance and Guggenheim Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Finance and Guggenheim Market
The main advantage of trading using opposite Applied Finance and Guggenheim Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Finance position performs unexpectedly, Guggenheim Market 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 Market will offset losses from the drop in Guggenheim Market's long position.| Applied Finance vs. Thrivent Small Cap | Applied Finance vs. Applied Finance Select | Applied Finance vs. Parnassus Endeavor Fund | Applied Finance vs. Queens Road Small |
| Guggenheim Market vs. Omni Small Cap Value | Guggenheim Market vs. Heartland Value Plus | Guggenheim Market vs. Victory Rs Partners | Guggenheim Market vs. Applied Finance Explorer |
Check out your portfolio center.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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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