Correlation Between Guggenheim Strategic and Gabelli Utility
Can any of the company-specific risk be diversified away by investing in both Guggenheim Strategic and Gabelli Utility 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 Strategic and Gabelli Utility into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guggenheim Strategic Opportunities and Gabelli Utility Closed, you can compare the effects of market volatilities on Guggenheim Strategic and Gabelli Utility 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 Strategic with a short position of Gabelli Utility. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Strategic and Gabelli Utility.
Diversification Opportunities for Guggenheim Strategic and Gabelli Utility
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Guggenheim and Gabelli is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Strategic Opportuni and Gabelli Utility Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Utility Closed and Guggenheim Strategic 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 Strategic Opportunities are associated (or correlated) with Gabelli Utility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Utility Closed has no effect on the direction of Guggenheim Strategic i.e., Guggenheim Strategic and Gabelli Utility go up and down completely randomly.
Pair Corralation between Guggenheim Strategic and Gabelli Utility
Considering the 90-day investment horizon Guggenheim Strategic Opportunities is expected to generate 0.61 times more return on investment than Gabelli Utility. However, Guggenheim Strategic Opportunities is 1.64 times less risky than Gabelli Utility. It trades about 0.16 of its potential returns per unit of risk. Gabelli Utility Closed is currently generating about 0.01 per unit of risk. If you would invest 1,160 in Guggenheim Strategic Opportunities on September 12, 2024 and sell it today you would earn a total of 399.00 from holding Guggenheim Strategic Opportunities or generate 34.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Guggenheim Strategic Opportuni vs. Gabelli Utility Closed
Performance |
| Timeline |
| Guggenheim Strategic |
| Gabelli Utility Closed |
Guggenheim Strategic and Gabelli Utility Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guggenheim Strategic and Gabelli Utility
The main advantage of trading using opposite Guggenheim Strategic and Gabelli Utility positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guggenheim Strategic position performs unexpectedly, Gabelli Utility 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 Gabelli Utility will offset losses from the drop in Gabelli Utility's long position.The idea behind Guggenheim Strategic Opportunities and Gabelli Utility Closed 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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