Correlation Between Guggenheim Managed and Prudential Government
Can any of the company-specific risk be diversified away by investing in both Guggenheim Managed and Prudential Government 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 Guggenheim Managed and Prudential Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guggenheim Managed Futures and Prudential Government Income, you can compare the effects of market volatilities on Guggenheim Managed and Prudential Government 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 Guggenheim Managed with a short position of Prudential Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Managed and Prudential Government.
Diversification Opportunities for Guggenheim Managed and Prudential Government
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Guggenheim and Prudential is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Managed Futures and Prudential Government Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Government and Guggenheim Managed 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 Guggenheim Managed Futures are associated (or correlated) with Prudential Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Government has no effect on the direction of Guggenheim Managed i.e., Guggenheim Managed and Prudential Government go up and down completely randomly.
Pair Corralation between Guggenheim Managed and Prudential Government
Assuming the 90 days horizon Guggenheim Managed Futures is expected to generate 1.28 times more return on investment than Prudential Government. However, Guggenheim Managed is 1.28 times more volatile than Prudential Government Income. It trades about 0.1 of its potential returns per unit of risk. Prudential Government Income is currently generating about 0.09 per unit of risk. If you would invest 2,056 in Guggenheim Managed Futures on August 31, 2024 and sell it today you would earn a total of 23.00 from holding Guggenheim Managed Futures or generate 1.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guggenheim Managed Futures vs. Prudential Government Income
Performance |
| Timeline |
| Guggenheim Managed |
| Prudential Government |
Guggenheim Managed and Prudential Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guggenheim Managed and Prudential Government
The main advantage of trading using opposite Guggenheim Managed and Prudential Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guggenheim Managed position performs unexpectedly, Prudential Government 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 Prudential Government will offset losses from the drop in Prudential Government's long position.| Guggenheim Managed vs. Ab Discovery Value | Guggenheim Managed vs. Fpa Queens Road | Guggenheim Managed vs. Columbia Small Cap | Guggenheim Managed vs. Great West Loomis Sayles |
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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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