Correlation Between Guggenheim High and Wells Fargo

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Can any of the company-specific risk be diversified away by investing in both Guggenheim High and Wells Fargo 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 Wells Fargo 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 Wells Fargo Advantage, you can compare the effects of market volatilities on Guggenheim High and Wells Fargo 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 Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim High and Wells Fargo.

Diversification Opportunities for Guggenheim High and Wells Fargo

0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between Guggenheim and Wells is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim High Yield and Wells Fargo Advantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Advantage 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 Wells Fargo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wells Fargo Advantage has no effect on the direction of Guggenheim High i.e., Guggenheim High and Wells Fargo go up and down completely randomly.

Pair Corralation between Guggenheim High and Wells Fargo

If you would invest  812.00  in Guggenheim High Yield on September 12, 2024 and sell it today you would earn a total of  6.00  from holding Guggenheim High Yield or generate 0.74% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy4.76%
ValuesDaily Returns

Guggenheim High Yield  vs.  Wells Fargo Advantage

 Performance 
       Timeline  
Guggenheim High Yield 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim High Yield are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Guggenheim High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Wells Fargo Advantage 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Wells Fargo Advantage has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Wells Fargo is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Guggenheim High and Wells Fargo Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Guggenheim High and Wells Fargo

The main advantage of trading using opposite Guggenheim High and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guggenheim High position performs unexpectedly, Wells Fargo 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 Wells Fargo will offset losses from the drop in Wells Fargo's long position.
The idea behind Guggenheim High Yield and Wells Fargo Advantage 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.
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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