Correlation Between Guggenheim Managed and Small Cap
Can any of the company-specific risk be diversified away by investing in both Guggenheim Managed and Small Cap 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 Small Cap 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 Small Cap Stock, you can compare the effects of market volatilities on Guggenheim Managed and Small Cap 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 Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Managed and Small Cap.
Diversification Opportunities for Guggenheim Managed and Small Cap
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Guggenheim and Small is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Managed Futures and Small Cap Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Stock 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 Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Stock has no effect on the direction of Guggenheim Managed i.e., Guggenheim Managed and Small Cap go up and down completely randomly.
Pair Corralation between Guggenheim Managed and Small Cap
Assuming the 90 days horizon Guggenheim Managed Futures is expected to under-perform the Small Cap. But the mutual fund apears to be less risky and, when comparing its historical volatility, Guggenheim Managed Futures is 1.67 times less risky than Small Cap. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Small Cap Stock is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,219 in Small Cap Stock on August 31, 2024 and sell it today you would earn a total of 306.00 from holding Small Cap Stock or generate 25.1% 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. Small Cap Stock
Performance |
| Timeline |
| Guggenheim Managed |
| Small Cap Stock |
Guggenheim Managed and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guggenheim Managed and Small Cap
The main advantage of trading using opposite Guggenheim Managed and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guggenheim Managed position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| Guggenheim Managed vs. Small Cap Stock | Guggenheim Managed vs. Delaware Limited Term Diversified | Guggenheim Managed vs. Jhancock Diversified Macro | Guggenheim Managed vs. American Century Diversified |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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