Correlation Between Guggenheim Strategic and Western Asset
Can any of the company-specific risk be diversified away by investing in both Guggenheim Strategic and Western Asset 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 Western Asset 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 Western Asset High, you can compare the effects of market volatilities on Guggenheim Strategic and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Strategic and Western Asset.
Diversification Opportunities for Guggenheim Strategic and Western Asset
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Guggenheim and Western is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Strategic Opportuni and Western Asset High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset High 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset High has no effect on the direction of Guggenheim Strategic i.e., Guggenheim Strategic and Western Asset go up and down completely randomly.
Pair Corralation between Guggenheim Strategic and Western Asset
Considering the 90-day investment horizon Guggenheim Strategic Opportunities is expected to under-perform the Western Asset. But the etf apears to be less risky and, when comparing its historical volatility, Guggenheim Strategic Opportunities is 1.34 times less risky than Western Asset. The etf trades about -0.03 of its potential returns per unit of risk. The Western Asset High is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 439.00 in Western Asset High on September 12, 2024 and sell it today you would earn a total of 8.00 from holding Western Asset High or generate 1.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Guggenheim Strategic Opportuni vs. Western Asset High
Performance |
| Timeline |
| Guggenheim Strategic |
| Western Asset High |
Guggenheim Strategic and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guggenheim Strategic and Western Asset
The main advantage of trading using opposite Guggenheim Strategic and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guggenheim Strategic position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.The idea behind Guggenheim Strategic Opportunities and Western Asset High 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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