Correlation Between Main Street and Guggenheim Strategic
Can any of the company-specific risk be diversified away by investing in both Main Street and Guggenheim Strategic 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 Main Street and Guggenheim Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Main Street Capital and Guggenheim Strategic Opportunities, you can compare the effects of market volatilities on Main Street and Guggenheim Strategic 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 Main Street with a short position of Guggenheim Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main Street and Guggenheim Strategic.
Diversification Opportunities for Main Street and Guggenheim Strategic
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Main and Guggenheim is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Main Street Capital and Guggenheim Strategic Opportuni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Strategic and Main Street 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 Main Street Capital are associated (or correlated) with Guggenheim Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Strategic has no effect on the direction of Main Street i.e., Main Street and Guggenheim Strategic go up and down completely randomly.
Pair Corralation between Main Street and Guggenheim Strategic
Given the investment horizon of 90 days Main Street Capital is expected to generate 1.64 times more return on investment than Guggenheim Strategic. However, Main Street is 1.64 times more volatile than Guggenheim Strategic Opportunities. It trades about 0.44 of its potential returns per unit of risk. Guggenheim Strategic Opportunities is currently generating about 0.24 per unit of risk. If you would invest 5,537 in Main Street Capital on October 20, 2024 and sell it today you would earn a total of 467.00 from holding Main Street Capital or generate 8.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Main Street Capital vs. Guggenheim Strategic Opportuni
Performance |
| Timeline |
| Main Street Capital |
| Guggenheim Strategic |
Main Street and Guggenheim Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Main Street and Guggenheim Strategic
The main advantage of trading using opposite Main Street and Guggenheim Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Main Street position performs unexpectedly, Guggenheim Strategic 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 Guggenheim Strategic will offset losses from the drop in Guggenheim Strategic's long position.| Main Street vs. Gladstone Capital | Main Street vs. PennantPark Floating Rate | Main Street vs. Horizon Technology Finance | Main Street vs. Prospect Capital |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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