Correlation Between Guggenheim Total and Federated Kaufmann
Can any of the company-specific risk be diversified away by investing in both Guggenheim Total and Federated Kaufmann 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 Total and Federated Kaufmann into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guggenheim Total Return and Federated Kaufmann Small, you can compare the effects of market volatilities on Guggenheim Total and Federated Kaufmann 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 Total with a short position of Federated Kaufmann. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Total and Federated Kaufmann.
Diversification Opportunities for Guggenheim Total and Federated Kaufmann
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Guggenheim and Federated is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Total Return and Federated Kaufmann Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Kaufmann Small and Guggenheim Total 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 Total Return are associated (or correlated) with Federated Kaufmann. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Kaufmann Small has no effect on the direction of Guggenheim Total i.e., Guggenheim Total and Federated Kaufmann go up and down completely randomly.
Pair Corralation between Guggenheim Total and Federated Kaufmann
Assuming the 90 days horizon Guggenheim Total Return is expected to under-perform the Federated Kaufmann. But the mutual fund apears to be less risky and, when comparing its historical volatility, Guggenheim Total Return is 3.31 times less risky than Federated Kaufmann. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Federated Kaufmann Small is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 4,997 in Federated Kaufmann Small on September 2, 2024 and sell it today you would earn a total of 627.00 from holding Federated Kaufmann Small or generate 12.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guggenheim Total Return vs. Federated Kaufmann Small
Performance |
| Timeline |
| Guggenheim Total Return |
| Federated Kaufmann Small |
Guggenheim Total and Federated Kaufmann Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guggenheim Total and Federated Kaufmann
The main advantage of trading using opposite Guggenheim Total and Federated Kaufmann positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guggenheim Total position performs unexpectedly, Federated Kaufmann 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 Federated Kaufmann will offset losses from the drop in Federated Kaufmann's long position.| Guggenheim Total vs. Guggenheim Total Return | Guggenheim Total vs. Guggenheim Total Return | Guggenheim Total vs. Calvert Long Term Income | Guggenheim Total vs. Guggenheim Investment Grade |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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