Correlation Between Guggenheim Strategic and Nuveen NASDAQ
Can any of the company-specific risk be diversified away by investing in both Guggenheim Strategic and Nuveen NASDAQ 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 Nuveen NASDAQ 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 Nuveen NASDAQ 100, you can compare the effects of market volatilities on Guggenheim Strategic and Nuveen NASDAQ 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 Nuveen NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Strategic and Nuveen NASDAQ.
Diversification Opportunities for Guggenheim Strategic and Nuveen NASDAQ
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Guggenheim and Nuveen is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Strategic Opportuni and Nuveen NASDAQ 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen NASDAQ 100 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 Nuveen NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen NASDAQ 100 has no effect on the direction of Guggenheim Strategic i.e., Guggenheim Strategic and Nuveen NASDAQ go up and down completely randomly.
Pair Corralation between Guggenheim Strategic and Nuveen NASDAQ
Considering the 90-day investment horizon Guggenheim Strategic is expected to generate 1.25 times less return on investment than Nuveen NASDAQ. In addition to that, Guggenheim Strategic is 1.4 times more volatile than Nuveen NASDAQ 100. It trades about 0.05 of its total potential returns per unit of risk. Nuveen NASDAQ 100 is currently generating about 0.09 per unit of volatility. If you would invest 2,130 in Nuveen NASDAQ 100 on September 12, 2024 and sell it today you would earn a total of 615.00 from holding Nuveen NASDAQ 100 or generate 28.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guggenheim Strategic Opportuni vs. Nuveen NASDAQ 100
Performance |
| Timeline |
| Guggenheim Strategic |
| Nuveen NASDAQ 100 |
Guggenheim Strategic and Nuveen NASDAQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guggenheim Strategic and Nuveen NASDAQ
The main advantage of trading using opposite Guggenheim Strategic and Nuveen NASDAQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guggenheim Strategic position performs unexpectedly, Nuveen NASDAQ 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 Nuveen NASDAQ will offset losses from the drop in Nuveen NASDAQ's long position.The idea behind Guggenheim Strategic Opportunities and Nuveen NASDAQ 100 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.
| Nuveen NASDAQ vs. Brookfield Real Assets | Nuveen NASDAQ vs. Guggenheim Strategic Opportunities | Nuveen NASDAQ vs. Cornerstone Strategic Return | Nuveen NASDAQ vs. Cornerstone Strategic Value |
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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