Correlation Between Asia Opportunity and Guggenheim Risk
Can any of the company-specific risk be diversified away by investing in both Asia Opportunity and Guggenheim Risk 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 Asia Opportunity and Guggenheim Risk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asia Opportunity Portfolio and Guggenheim Risk Managed, you can compare the effects of market volatilities on Asia Opportunity and Guggenheim Risk 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 Asia Opportunity with a short position of Guggenheim Risk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Opportunity and Guggenheim Risk.
Diversification Opportunities for Asia Opportunity and Guggenheim Risk
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Asia and Guggenheim is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Asia Opportunity Portfolio and Guggenheim Risk Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Risk Managed and Asia Opportunity 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 Asia Opportunity Portfolio are associated (or correlated) with Guggenheim Risk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Risk Managed has no effect on the direction of Asia Opportunity i.e., Asia Opportunity and Guggenheim Risk go up and down completely randomly.
Pair Corralation between Asia Opportunity and Guggenheim Risk
Assuming the 90 days horizon Asia Opportunity is expected to generate 2.7 times less return on investment than Guggenheim Risk. In addition to that, Asia Opportunity is 1.85 times more volatile than Guggenheim Risk Managed. It trades about 0.03 of its total potential returns per unit of risk. Guggenheim Risk Managed is currently generating about 0.14 per unit of volatility. If you would invest 3,378 in Guggenheim Risk Managed on September 4, 2024 and sell it today you would earn a total of 76.00 from holding Guggenheim Risk Managed or generate 2.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asia Opportunity Portfolio vs. Guggenheim Risk Managed
Performance |
| Timeline |
| Asia Opportunity Por |
| Guggenheim Risk Managed |
Asia Opportunity and Guggenheim Risk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asia Opportunity and Guggenheim Risk
The main advantage of trading using opposite Asia Opportunity and Guggenheim Risk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Opportunity position performs unexpectedly, Guggenheim Risk 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 Risk will offset losses from the drop in Guggenheim Risk's long position.| Asia Opportunity vs. Guggenheim Risk Managed | Asia Opportunity vs. Amg Managers Centersquare | Asia Opportunity vs. Nuveen Real Estate | Asia Opportunity vs. Pender Real Estate |
| 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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