Correlation Between Guggenheim Managed and Dimensional Retirement
Can any of the company-specific risk be diversified away by investing in both Guggenheim Managed and Dimensional Retirement 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 Dimensional Retirement 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 Dimensional Retirement Income, you can compare the effects of market volatilities on Guggenheim Managed and Dimensional Retirement 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 Dimensional Retirement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Managed and Dimensional Retirement.
Diversification Opportunities for Guggenheim Managed and Dimensional Retirement
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Guggenheim and Dimensional is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Managed Futures and Dimensional Retirement Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional Retirement 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 Dimensional Retirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional Retirement has no effect on the direction of Guggenheim Managed i.e., Guggenheim Managed and Dimensional Retirement go up and down completely randomly.
Pair Corralation between Guggenheim Managed and Dimensional Retirement
Assuming the 90 days horizon Guggenheim Managed is expected to generate 1.49 times less return on investment than Dimensional Retirement. In addition to that, Guggenheim Managed is 2.92 times more volatile than Dimensional Retirement Income. It trades about 0.02 of its total potential returns per unit of risk. Dimensional Retirement Income is currently generating about 0.08 per unit of volatility. If you would invest 1,025 in Dimensional Retirement Income on October 16, 2024 and sell it today you would earn a total of 114.00 from holding Dimensional Retirement Income or generate 11.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guggenheim Managed Futures vs. Dimensional Retirement Income
Performance |
| Timeline |
| Guggenheim Managed |
| Dimensional Retirement |
Guggenheim Managed and Dimensional Retirement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guggenheim Managed and Dimensional Retirement
The main advantage of trading using opposite Guggenheim Managed and Dimensional Retirement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guggenheim Managed position performs unexpectedly, Dimensional Retirement 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 Dimensional Retirement will offset losses from the drop in Dimensional Retirement's long position.The idea behind Guggenheim Managed Futures and Dimensional Retirement Income pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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