Correlation Between California High-yield and Guggenheim Small
Can any of the company-specific risk be diversified away by investing in both California High-yield and Guggenheim Small 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 California High-yield and Guggenheim Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California High Yield Municipal and Guggenheim Small Cap, you can compare the effects of market volatilities on California High-yield and Guggenheim Small 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 California High-yield with a short position of Guggenheim Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of California High-yield and Guggenheim Small.
Diversification Opportunities for California High-yield and Guggenheim Small
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between California and Guggenheim is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding California High Yield Municipa and Guggenheim Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Small Cap and California High-yield 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 California High Yield Municipal are associated (or correlated) with Guggenheim Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Small Cap has no effect on the direction of California High-yield i.e., California High-yield and Guggenheim Small go up and down completely randomly.
Pair Corralation between California High-yield and Guggenheim Small
Assuming the 90 days horizon California High-yield is expected to generate 1.31 times less return on investment than Guggenheim Small. But when comparing it to its historical volatility, California High Yield Municipal is 3.75 times less risky than Guggenheim Small. It trades about 0.07 of its potential returns per unit of risk. Guggenheim Small Cap is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,420 in Guggenheim Small Cap on September 4, 2024 and sell it today you would earn a total of 154.00 from holding Guggenheim Small Cap or generate 10.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.14% |
| Values | Daily Returns |
California High Yield Municipa vs. Guggenheim Small Cap
Performance |
| Timeline |
| California High Yield |
| Guggenheim Small Cap |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
California High-yield and Guggenheim Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California High-yield and Guggenheim Small
The main advantage of trading using opposite California High-yield and Guggenheim Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California High-yield position performs unexpectedly, Guggenheim Small 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 Small will offset losses from the drop in Guggenheim Small's long position.| California High-yield vs. Mid Cap Value | California High-yield vs. Equity Growth Fund | California High-yield vs. Income Growth Fund | California High-yield vs. Diversified Bond Fund |
| Guggenheim Small vs. Gabelli Global Financial | Guggenheim Small vs. Royce Global Financial | Guggenheim Small vs. Icon Financial Fund | Guggenheim Small vs. Blackrock Financial Institutions |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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