Correlation Between Guggenheim High and Diamond Hill
Can any of the company-specific risk be diversified away by investing in both Guggenheim High and Diamond Hill 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 Diamond Hill 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 Diamond Hill Long Short, you can compare the effects of market volatilities on Guggenheim High and Diamond Hill 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 Diamond Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim High and Diamond Hill.
Diversification Opportunities for Guggenheim High and Diamond Hill
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Guggenheim and Diamond is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim High Yield and Diamond Hill Long Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Hill Long 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 Diamond Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Hill Long has no effect on the direction of Guggenheim High i.e., Guggenheim High and Diamond Hill go up and down completely randomly.
Pair Corralation between Guggenheim High and Diamond Hill
Assuming the 90 days horizon Guggenheim High Yield is expected to generate 0.22 times more return on investment than Diamond Hill. However, Guggenheim High Yield is 4.54 times less risky than Diamond Hill. It trades about 0.09 of its potential returns per unit of risk. Diamond Hill Long Short is currently generating about -0.06 per unit of risk. If you would invest 804.00 in Guggenheim High Yield on October 24, 2024 and sell it today you would earn a total of 11.00 from holding Guggenheim High Yield or generate 1.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guggenheim High Yield vs. Diamond Hill Long Short
Performance |
| Timeline |
| Guggenheim High Yield |
| Diamond Hill Long |
Guggenheim High and Diamond Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guggenheim High and Diamond Hill
The main advantage of trading using opposite Guggenheim High and Diamond Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guggenheim High position performs unexpectedly, Diamond Hill 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 Diamond Hill will offset losses from the drop in Diamond Hill's long position.| Guggenheim High vs. Pace High Yield | Guggenheim High vs. Ab High Income | Guggenheim High vs. Msift High Yield | Guggenheim High vs. Ab High Income |
| Diamond Hill vs. Guggenheim High Yield | Diamond Hill vs. Artisan High Income | Diamond Hill vs. Jpmorgan High Yield | Diamond Hill vs. Virtus High Yield |
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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