Correlation Between Guggenheim High and Aqr Style
Can any of the company-specific risk be diversified away by investing in both Guggenheim High and Aqr Style 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 Aqr Style 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 Aqr Style Premia, you can compare the effects of market volatilities on Guggenheim High and Aqr Style 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 Aqr Style. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim High and Aqr Style.
Diversification Opportunities for Guggenheim High and Aqr Style
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Guggenheim and Aqr is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim High Yield and Aqr Style Premia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Style Premia 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 Aqr Style. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Style Premia has no effect on the direction of Guggenheim High i.e., Guggenheim High and Aqr Style go up and down completely randomly.
Pair Corralation between Guggenheim High and Aqr Style
Assuming the 90 days horizon Guggenheim High is expected to generate 1.63 times less return on investment than Aqr Style. But when comparing it to its historical volatility, Guggenheim High Yield is 5.3 times less risky than Aqr Style. It trades about 0.13 of its potential returns per unit of risk. Aqr Style Premia is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 789.00 in Aqr Style Premia on September 12, 2024 and sell it today you would earn a total of 13.00 from holding Aqr Style Premia or generate 1.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guggenheim High Yield vs. Aqr Style Premia
Performance |
| Timeline |
| Guggenheim High Yield |
| Aqr Style Premia |
Guggenheim High and Aqr Style Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guggenheim High and Aqr Style
The main advantage of trading using opposite Guggenheim High and Aqr Style positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guggenheim High position performs unexpectedly, Aqr Style 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 Aqr Style will offset losses from the drop in Aqr Style's long position.The idea behind Guggenheim High Yield and Aqr Style Premia 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.
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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