Correlation Between Commonwealth Global and Guggenheim Energy
Can any of the company-specific risk be diversified away by investing in both Commonwealth Global and Guggenheim Energy 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 Commonwealth Global and Guggenheim Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commonwealth Global Fund and Guggenheim Energy Income, you can compare the effects of market volatilities on Commonwealth Global and Guggenheim Energy 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 Commonwealth Global with a short position of Guggenheim Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Global and Guggenheim Energy.
Diversification Opportunities for Commonwealth Global and Guggenheim Energy
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Commonwealth and Guggenheim is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Global Fund and Guggenheim Energy Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Energy Income and Commonwealth Global 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 Commonwealth Global Fund are associated (or correlated) with Guggenheim Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Energy Income has no effect on the direction of Commonwealth Global i.e., Commonwealth Global and Guggenheim Energy go up and down completely randomly.
Pair Corralation between Commonwealth Global and Guggenheim Energy
If you would invest 1,843 in Commonwealth Global Fund on August 25, 2024 and sell it today you would earn a total of 271.00 from holding Commonwealth Global Fund or generate 14.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 0.4% |
| Values | Daily Returns |
Commonwealth Global Fund vs. Guggenheim Energy Income
Performance |
| Timeline |
| Commonwealth Global |
| Guggenheim Energy Income |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Commonwealth Global and Guggenheim Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Global and Guggenheim Energy
The main advantage of trading using opposite Commonwealth Global and Guggenheim Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Global position performs unexpectedly, Guggenheim Energy 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 Energy will offset losses from the drop in Guggenheim Energy's long position.The idea behind Commonwealth Global Fund and Guggenheim Energy Income 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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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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