Correlation Between Cref Money and Guggenheim Market
Can any of the company-specific risk be diversified away by investing in both Cref Money and Guggenheim Market 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 Cref Money and Guggenheim Market into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cref Money Market and Guggenheim Market Neutral, you can compare the effects of market volatilities on Cref Money and Guggenheim Market 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 Cref Money with a short position of Guggenheim Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cref Money and Guggenheim Market.
Diversification Opportunities for Cref Money and Guggenheim Market
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Cref and Guggenheim is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Cref Money Market and Guggenheim Market Neutral in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Market Neutral and Cref Money 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 Cref Money Market are associated (or correlated) with Guggenheim Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Market Neutral has no effect on the direction of Cref Money i.e., Cref Money and Guggenheim Market go up and down completely randomly.
Pair Corralation between Cref Money and Guggenheim Market
Assuming the 90 days trading horizon Cref Money Market is expected to generate 0.16 times more return on investment than Guggenheim Market. However, Cref Money Market is 6.39 times less risky than Guggenheim Market. It trades about 0.98 of its potential returns per unit of risk. Guggenheim Market Neutral is currently generating about 0.1 per unit of risk. If you would invest 2,962 in Cref Money Market on September 3, 2024 and sell it today you would earn a total of 10.00 from holding Cref Money Market or generate 0.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cref Money Market vs. Guggenheim Market Neutral
Performance |
| Timeline |
| Cref Money Market |
| Guggenheim Market Neutral |
Cref Money and Guggenheim Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cref Money and Guggenheim Market
The main advantage of trading using opposite Cref Money and Guggenheim Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cref Money position performs unexpectedly, Guggenheim Market 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 Market will offset losses from the drop in Guggenheim Market's long position.| Cref Money vs. Health Biotchnology Portfolio | Cref Money vs. Health Biotchnology Portfolio | Cref Money vs. Lord Abbett Health | Cref Money vs. Allianzgi Health Sciences |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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