Correlation Between Guggenheim Small and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Guggenheim Small and Dow Jones 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 Small and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guggenheim Small Cap and Dow Jones Industrial, you can compare the effects of market volatilities on Guggenheim Small and Dow Jones 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 Small with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Small and Dow Jones.
Diversification Opportunities for Guggenheim Small and Dow Jones
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Guggenheim and Dow is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Small Cap and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Guggenheim Small 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 Small Cap are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Guggenheim Small i.e., Guggenheim Small and Dow Jones go up and down completely randomly.
Pair Corralation between Guggenheim Small and Dow Jones
Assuming the 90 days horizon Guggenheim Small is expected to generate 1.57 times less return on investment than Dow Jones. In addition to that, Guggenheim Small is 1.42 times more volatile than Dow Jones Industrial. It trades about 0.06 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.12 per unit of volatility. If you would invest 3,515,104 in Dow Jones Industrial on September 14, 2024 and sell it today you would earn a total of 876,308 from holding Dow Jones Industrial or generate 24.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 86.57% |
| Values | Daily Returns |
Guggenheim Small Cap vs. Dow Jones Industrial
Performance |
| Timeline |
Guggenheim Small and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Guggenheim Small Cap
Pair trading matchups for Guggenheim Small
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Guggenheim Small and Dow Jones
The main advantage of trading using opposite Guggenheim Small and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guggenheim Small position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Guggenheim Small vs. Putnam Money Market | Guggenheim Small vs. Edward Jones Money | Guggenheim Small vs. Ab Government Exchange | Guggenheim Small vs. Prudential Government Money |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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