Correlation Between Guggenheim Investment and Johnson Institutional
Can any of the company-specific risk be diversified away by investing in both Guggenheim Investment and Johnson Institutional 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 Investment and Johnson Institutional into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guggenheim Investment Grade and Johnson Institutional E, you can compare the effects of market volatilities on Guggenheim Investment and Johnson Institutional 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 Investment with a short position of Johnson Institutional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Investment and Johnson Institutional.
Diversification Opportunities for Guggenheim Investment and Johnson Institutional
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Guggenheim and Johnson is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Investment Grade and Johnson Institutional E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Institutional and Guggenheim Investment 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 Investment Grade are associated (or correlated) with Johnson Institutional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Institutional has no effect on the direction of Guggenheim Investment i.e., Guggenheim Investment and Johnson Institutional go up and down completely randomly.
Pair Corralation between Guggenheim Investment and Johnson Institutional
Assuming the 90 days horizon Guggenheim Investment Grade is expected to generate 0.86 times more return on investment than Johnson Institutional. However, Guggenheim Investment Grade is 1.17 times less risky than Johnson Institutional. It trades about 0.04 of its potential returns per unit of risk. Johnson Institutional E is currently generating about 0.03 per unit of risk. If you would invest 1,503 in Guggenheim Investment Grade on September 13, 2024 and sell it today you would earn a total of 125.00 from holding Guggenheim Investment Grade or generate 8.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guggenheim Investment Grade vs. Johnson Institutional E
Performance |
| Timeline |
| Guggenheim Investment |
| Johnson Institutional |
Guggenheim Investment and Johnson Institutional Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guggenheim Investment and Johnson Institutional
The main advantage of trading using opposite Guggenheim Investment and Johnson Institutional positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guggenheim Investment position performs unexpectedly, Johnson Institutional 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 Johnson Institutional will offset losses from the drop in Johnson Institutional's long position.The idea behind Guggenheim Investment Grade and Johnson Institutional E 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.
| Johnson Institutional vs. Johnson Core Plus | Johnson Institutional vs. Johnson Enhanced Return | Johnson Institutional vs. Johnson Equity Income | Johnson Institutional vs. Johnson Equity Income |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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