Correlation Between Guggenheim Strategic and Pimco Dynamic
Can any of the company-specific risk be diversified away by investing in both Guggenheim Strategic and Pimco Dynamic 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 Pimco Dynamic 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 Pimco Dynamic Income, you can compare the effects of market volatilities on Guggenheim Strategic and Pimco Dynamic 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 Pimco Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Strategic and Pimco Dynamic.
Diversification Opportunities for Guggenheim Strategic and Pimco Dynamic
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Guggenheim and Pimco is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Strategic Opportuni and Pimco Dynamic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Dynamic Income 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 Pimco Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Dynamic Income has no effect on the direction of Guggenheim Strategic i.e., Guggenheim Strategic and Pimco Dynamic go up and down completely randomly.
Pair Corralation between Guggenheim Strategic and Pimco Dynamic
Considering the 90-day investment horizon Guggenheim Strategic Opportunities is expected to generate 0.57 times more return on investment than Pimco Dynamic. However, Guggenheim Strategic Opportunities is 1.74 times less risky than Pimco Dynamic. It trades about 0.26 of its potential returns per unit of risk. Pimco Dynamic Income is currently generating about 0.02 per unit of risk. If you would invest 1,546 in Guggenheim Strategic Opportunities on August 30, 2024 and sell it today you would earn a total of 34.00 from holding Guggenheim Strategic Opportunities or generate 2.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Guggenheim Strategic Opportuni vs. Pimco Dynamic Income
Performance |
| Timeline |
| Guggenheim Strategic |
| Pimco Dynamic Income |
Guggenheim Strategic and Pimco Dynamic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guggenheim Strategic and Pimco Dynamic
The main advantage of trading using opposite Guggenheim Strategic and Pimco Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guggenheim Strategic position performs unexpectedly, Pimco Dynamic 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 Pimco Dynamic will offset losses from the drop in Pimco Dynamic's long position.The idea behind Guggenheim Strategic Opportunities and Pimco Dynamic 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.
| Pimco Dynamic vs. Pimco Corporate Income | Pimco Dynamic vs. Guggenheim Strategic Opportunities | Pimco Dynamic vs. Pimco Dynamic Income | Pimco Dynamic vs. Pimco High Income |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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