Correlation Between American Funds and Guggenheim High
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and Guggenheim High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds 2010 and Guggenheim High Yield, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of Guggenheim High. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Guggenheim High.
Diversification Opportunities for American Funds and Guggenheim High
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and GUGGENHEIM is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding American Funds 2010 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 American Funds 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 American Funds 2010 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 American Funds i.e., American Funds and Guggenheim High go up and down completely randomly.
Pair Corralation between American Funds and Guggenheim High
Assuming the 90 days horizon American Funds 2010 is expected to generate 1.69 times more return on investment than Guggenheim High. However, American Funds is 1.69 times more volatile than Guggenheim High Yield. It trades about 0.19 of its potential returns per unit of risk. Guggenheim High Yield is currently generating about 0.24 per unit of risk. If you would invest 1,150 in American Funds 2010 on August 28, 2024 and sell it today you would earn a total of 85.00 from holding American Funds 2010 or generate 7.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
American Funds 2010 vs. Guggenheim High Yield
Performance |
| Timeline |
| American Funds 2010 |
| Guggenheim High Yield |
American Funds and Guggenheim High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Guggenheim High
The main advantage of trading using opposite American Funds and Guggenheim High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. Qs Large Cap | American Funds vs. Rational Special Situations | American Funds vs. Auer Growth Fund | American Funds vs. Blackrock Sm Cap |
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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