Correlation Between Performance Trust and Guggenheim Investment
Can any of the company-specific risk be diversified away by investing in both Performance Trust and Guggenheim Investment 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 Performance Trust and Guggenheim Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Performance Trust Municipal and Guggenheim Investment Grade, you can compare the effects of market volatilities on Performance Trust and Guggenheim Investment 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 Performance Trust with a short position of Guggenheim Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performance Trust and Guggenheim Investment.
Diversification Opportunities for Performance Trust and Guggenheim Investment
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Performance and Guggenheim is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Performance Trust Municipal and Guggenheim Investment Grade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Investment and Performance Trust 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 Performance Trust Municipal are associated (or correlated) with Guggenheim Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Investment has no effect on the direction of Performance Trust i.e., Performance Trust and Guggenheim Investment go up and down completely randomly.
Pair Corralation between Performance Trust and Guggenheim Investment
Assuming the 90 days horizon Performance Trust is expected to generate 1.04 times less return on investment than Guggenheim Investment. But when comparing it to its historical volatility, Performance Trust Municipal is 1.17 times less risky than Guggenheim Investment. It trades about 0.12 of its potential returns per unit of risk. Guggenheim Investment Grade is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,572 in Guggenheim Investment Grade on September 1, 2024 and sell it today you would earn a total of 69.00 from holding Guggenheim Investment Grade or generate 4.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Performance Trust Municipal vs. Guggenheim Investment Grade
Performance |
| Timeline |
| Performance Trust |
| Guggenheim Investment |
Performance Trust and Guggenheim Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Performance Trust and Guggenheim Investment
The main advantage of trading using opposite Performance Trust and Guggenheim Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Trust position performs unexpectedly, Guggenheim Investment 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 Investment will offset losses from the drop in Guggenheim Investment's long position.| Performance Trust vs. Performance Trust Municipal | Performance Trust vs. Performance Trust Strategic | Performance Trust vs. Guggenheim Investment Grade | Performance Trust vs. Nuveen High Yield |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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