Correlation Between Guggenheim Strategic and Horizon Technology

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Can any of the company-specific risk be diversified away by investing in both Guggenheim Strategic and Horizon Technology 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 Horizon Technology 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 Horizon Technology Finance, you can compare the effects of market volatilities on Guggenheim Strategic and Horizon Technology 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 Horizon Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Strategic and Horizon Technology.

Diversification Opportunities for Guggenheim Strategic and Horizon Technology

0.1
  Correlation Coefficient

Average diversification

The 3 months correlation between Guggenheim and Horizon is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Strategic Opportuni and Horizon Technology Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Technology 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 Horizon Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Technology has no effect on the direction of Guggenheim Strategic i.e., Guggenheim Strategic and Horizon Technology go up and down completely randomly.

Pair Corralation between Guggenheim Strategic and Horizon Technology

Considering the 90-day investment horizon Guggenheim Strategic Opportunities is expected to generate 0.5 times more return on investment than Horizon Technology. However, Guggenheim Strategic Opportunities is 2.01 times less risky than Horizon Technology. It trades about 0.09 of its potential returns per unit of risk. Horizon Technology Finance is currently generating about -0.09 per unit of risk. If you would invest  1,442  in Guggenheim Strategic Opportunities on November 2, 2024 and sell it today you would earn a total of  77.00  from holding Guggenheim Strategic Opportunities or generate 5.34% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Guggenheim Strategic Opportuni  vs.  Horizon Technology Finance

 Performance 
       Timeline  
Guggenheim Strategic 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Guggenheim Strategic Opportunities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Guggenheim Strategic is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.
Horizon Technology 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Horizon Technology Finance are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Horizon Technology is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Guggenheim Strategic and Horizon Technology Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Guggenheim Strategic and Horizon Technology

The main advantage of trading using opposite Guggenheim Strategic and Horizon Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guggenheim Strategic position performs unexpectedly, Horizon Technology 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 Horizon Technology will offset losses from the drop in Horizon Technology's long position.
The idea behind Guggenheim Strategic Opportunities and Horizon Technology Finance 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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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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