Correlation Between Commodities Strategy and Guggenheim Limited
Can any of the company-specific risk be diversified away by investing in both Commodities Strategy and Guggenheim Limited 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 Commodities Strategy and Guggenheim Limited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commodities Strategy Fund and Guggenheim Limited Duration, you can compare the effects of market volatilities on Commodities Strategy and Guggenheim Limited 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 Commodities Strategy with a short position of Guggenheim Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commodities Strategy and Guggenheim Limited.
Diversification Opportunities for Commodities Strategy and Guggenheim Limited
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Commodities and Guggenheim is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Commodities Strategy Fund and Guggenheim Limited Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Limited and Commodities Strategy 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 Commodities Strategy Fund are associated (or correlated) with Guggenheim Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Limited has no effect on the direction of Commodities Strategy i.e., Commodities Strategy and Guggenheim Limited go up and down completely randomly.
Pair Corralation between Commodities Strategy and Guggenheim Limited
Assuming the 90 days horizon Commodities Strategy Fund is expected to under-perform the Guggenheim Limited. In addition to that, Commodities Strategy is 8.88 times more volatile than Guggenheim Limited Duration. It trades about -0.01 of its total potential returns per unit of risk. Guggenheim Limited Duration is currently generating about 0.21 per unit of volatility. If you would invest 2,370 in Guggenheim Limited Duration on September 3, 2024 and sell it today you would earn a total of 74.00 from holding Guggenheim Limited Duration or generate 3.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commodities Strategy Fund vs. Guggenheim Limited Duration
Performance |
| Timeline |
| Commodities Strategy |
| Guggenheim Limited |
Commodities Strategy and Guggenheim Limited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commodities Strategy and Guggenheim Limited
The main advantage of trading using opposite Commodities Strategy and Guggenheim Limited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commodities Strategy position performs unexpectedly, Guggenheim Limited 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 Limited will offset losses from the drop in Guggenheim Limited's long position.The idea behind Commodities Strategy Fund and Guggenheim Limited Duration 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.
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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