Correlation Between Guggenheim Risk and Westwood Alternative
Can any of the company-specific risk be diversified away by investing in both Guggenheim Risk and Westwood Alternative 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 Westwood Alternative 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 Westwood Alternative Income, you can compare the effects of market volatilities on Guggenheim Risk and Westwood Alternative 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 Westwood Alternative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Risk and Westwood Alternative.
Diversification Opportunities for Guggenheim Risk and Westwood Alternative
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Guggenheim and Westwood is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Risk Managed and Westwood Alternative Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood Alternative 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 Westwood Alternative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood Alternative has no effect on the direction of Guggenheim Risk i.e., Guggenheim Risk and Westwood Alternative go up and down completely randomly.
Pair Corralation between Guggenheim Risk and Westwood Alternative
Assuming the 90 days horizon Guggenheim Risk Managed is expected to generate 10.45 times more return on investment than Westwood Alternative. However, Guggenheim Risk is 10.45 times more volatile than Westwood Alternative Income. It trades about 0.04 of its potential returns per unit of risk. Westwood Alternative Income is currently generating about 0.25 per unit of risk. If you would invest 2,980 in Guggenheim Risk Managed on September 12, 2024 and sell it today you would earn a total of 426.00 from holding Guggenheim Risk Managed or generate 14.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guggenheim Risk Managed vs. Westwood Alternative Income
Performance |
| Timeline |
| Guggenheim Risk Managed |
| Westwood Alternative |
Guggenheim Risk and Westwood Alternative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guggenheim Risk and Westwood Alternative
The main advantage of trading using opposite Guggenheim Risk and Westwood Alternative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guggenheim Risk position performs unexpectedly, Westwood Alternative 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 Westwood Alternative will offset losses from the drop in Westwood Alternative's 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 |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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