Correlation Between NYSE Composite and Guggenheim Alpha
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Guggenheim Alpha 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 NYSE Composite and Guggenheim Alpha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Guggenheim Alpha Opportunity, you can compare the effects of market volatilities on NYSE Composite and Guggenheim Alpha 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 NYSE Composite with a short position of Guggenheim Alpha. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Guggenheim Alpha.
Diversification Opportunities for NYSE Composite and Guggenheim Alpha
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Guggenheim is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Guggenheim Alpha Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Alpha Opp and NYSE Composite 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 NYSE Composite are associated (or correlated) with Guggenheim Alpha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Alpha Opp has no effect on the direction of NYSE Composite i.e., NYSE Composite and Guggenheim Alpha go up and down completely randomly.
Pair Corralation between NYSE Composite and Guggenheim Alpha
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.95 times more return on investment than Guggenheim Alpha. However, NYSE Composite is 1.05 times less risky than Guggenheim Alpha. It trades about 0.11 of its potential returns per unit of risk. Guggenheim Alpha Opportunity is currently generating about -0.01 per unit of risk. If you would invest 1,925,354 in NYSE Composite on November 1, 2024 and sell it today you would earn a total of 91,268 from holding NYSE Composite or generate 4.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Guggenheim Alpha Opportunity
Performance |
| Timeline |
NYSE Composite and Guggenheim Alpha Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Guggenheim Alpha Opportunity
Pair trading matchups for Guggenheim Alpha
Pair Trading with NYSE Composite and Guggenheim Alpha
The main advantage of trading using opposite NYSE Composite and Guggenheim Alpha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Guggenheim Alpha 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 Alpha will offset losses from the drop in Guggenheim Alpha's long position.| NYSE Composite vs. Pembina Pipeline | NYSE Composite vs. Precision Drilling | NYSE Composite vs. HUTCHMED DRC | NYSE Composite vs. Transocean |
| Guggenheim Alpha vs. Guggenheim Styleplus | Guggenheim Alpha vs. Guggenheim World Equity | Guggenheim Alpha vs. Guggenheim Investment Grade | Guggenheim Alpha vs. Guggenheim Alpha Opportunity |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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