Correlation Between Guggenheim High and American Mutual
Can any of the company-specific risk be diversified away by investing in both Guggenheim High and American Mutual 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 High and American Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guggenheim High Yield and American Mutual Fund, you can compare the effects of market volatilities on Guggenheim High and American Mutual 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 High with a short position of American Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim High and American Mutual.
Diversification Opportunities for Guggenheim High and American Mutual
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Guggenheim and American is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim High Yield and American Mutual Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Mutual and Guggenheim High 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 High Yield are associated (or correlated) with American Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Mutual has no effect on the direction of Guggenheim High i.e., Guggenheim High and American Mutual go up and down completely randomly.
Pair Corralation between Guggenheim High and American Mutual
Assuming the 90 days horizon Guggenheim High is expected to generate 1.33 times less return on investment than American Mutual. But when comparing it to its historical volatility, Guggenheim High Yield is 2.24 times less risky than American Mutual. It trades about 0.15 of its potential returns per unit of risk. American Mutual Fund is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,597 in American Mutual Fund on September 14, 2024 and sell it today you would earn a total of 1,329 from holding American Mutual Fund or generate 28.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guggenheim High Yield vs. American Mutual Fund
Performance |
| Timeline |
| Guggenheim High Yield |
| American Mutual |
Guggenheim High and American Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guggenheim High and American Mutual
The main advantage of trading using opposite Guggenheim High and American Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guggenheim High position performs unexpectedly, American Mutual 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 American Mutual will offset losses from the drop in American Mutual's long position.| Guggenheim High vs. Qs Large Cap | Guggenheim High vs. Guidemark Large Cap | Guggenheim High vs. T Rowe Price | Guggenheim High vs. T Rowe Price |
| American Mutual vs. Putnam Money Market | American Mutual vs. Money Market Obligations | American Mutual vs. Matson Money Equity | American Mutual vs. Cref Money Market |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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