Correlation Between Guggenheim Risk and Growth Opportunities
Can any of the company-specific risk be diversified away by investing in both Guggenheim Risk and Growth Opportunities 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 Risk and Growth Opportunities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guggenheim Risk Managed and Growth Opportunities Fund, you can compare the effects of market volatilities on Guggenheim Risk and Growth Opportunities 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 Risk with a short position of Growth Opportunities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Risk and Growth Opportunities.
Diversification Opportunities for Guggenheim Risk and Growth Opportunities
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Guggenheim and Growth is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Risk Managed and Growth Opportunities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Opportunities and Guggenheim Risk 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 Risk Managed are associated (or correlated) with Growth Opportunities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Opportunities has no effect on the direction of Guggenheim Risk i.e., Guggenheim Risk and Growth Opportunities go up and down completely randomly.
Pair Corralation between Guggenheim Risk and Growth Opportunities
Assuming the 90 days horizon Guggenheim Risk is expected to generate 1.85 times less return on investment than Growth Opportunities. But when comparing it to its historical volatility, Guggenheim Risk Managed is 1.01 times less risky than Growth Opportunities. It trades about 0.06 of its potential returns per unit of risk. Growth Opportunities Fund is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,808 in Growth Opportunities Fund on September 1, 2024 and sell it today you would earn a total of 1,900 from holding Growth Opportunities Fund or generate 49.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guggenheim Risk Managed vs. Growth Opportunities Fund
Performance |
| Timeline |
| Guggenheim Risk Managed |
| Growth Opportunities |
Guggenheim Risk and Growth Opportunities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guggenheim Risk and Growth Opportunities
The main advantage of trading using opposite Guggenheim Risk and Growth Opportunities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guggenheim Risk position performs unexpectedly, Growth Opportunities 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 Growth Opportunities will offset losses from the drop in Growth Opportunities' long position.| Guggenheim Risk vs. Guggenheim Risk Managed | Guggenheim Risk vs. Guggenheim Risk Managed | Guggenheim Risk vs. Guggenheim Risk Managed | Guggenheim Risk vs. Lazard Global Listed |
| Growth Opportunities vs. Ab Select Equity | Growth Opportunities vs. Icon Equity Income | Growth Opportunities vs. Multimedia Portfolio Multimedia | Growth Opportunities vs. Ms Global Fixed |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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