Correlation Between Pace High and Guggenheim High
Can any of the company-specific risk be diversified away by investing in both Pace High and Guggenheim High 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 Pace High and Guggenheim High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pace High Yield and Guggenheim High Yield, you can compare the effects of market volatilities on Pace High and Guggenheim High 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 Pace High with a short position of Guggenheim High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace High and Guggenheim High.
Diversification Opportunities for Pace High and Guggenheim High
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PACE and GUGGENHEIM is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Pace High Yield and Guggenheim High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim High Yield and Pace High 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 Pace High Yield are associated (or correlated) with Guggenheim High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim High Yield has no effect on the direction of Pace High i.e., Pace High and Guggenheim High go up and down completely randomly.
Pair Corralation between Pace High and Guggenheim High
Assuming the 90 days horizon Pace High is expected to generate 1.31 times less return on investment than Guggenheim High. In addition to that, Pace High is 1.24 times more volatile than Guggenheim High Yield. It trades about 0.12 of its total potential returns per unit of risk. Guggenheim High Yield is currently generating about 0.2 per unit of volatility. If you would invest 1,004 in Guggenheim High Yield on August 25, 2024 and sell it today you would earn a total of 6.00 from holding Guggenheim High Yield or generate 0.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace High Yield vs. Guggenheim High Yield
Performance |
| Timeline |
| Pace High Yield |
| Guggenheim High Yield |
Pace High and Guggenheim High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace High and Guggenheim High
The main advantage of trading using opposite Pace High and Guggenheim High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace High position performs unexpectedly, Guggenheim High 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 High will offset losses from the drop in Guggenheim High's long position.| Pace High vs. Prudential High Yield | Pace High vs. Parametric Modity Strategy | Pace High vs. HUMANA INC | Pace High vs. Aquagold International |
| Guggenheim High vs. Prudential High Yield | Guggenheim High vs. Parametric Modity Strategy | Guggenheim High vs. HUMANA INC | Guggenheim High vs. Aquagold International |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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