Correlation Between Ultra Short and Guggenheim Floating
Can any of the company-specific risk be diversified away by investing in both Ultra Short and Guggenheim Floating 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 Ultra Short and Guggenheim Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ultra Short Term Fixed and Guggenheim Floating Rate, you can compare the effects of market volatilities on Ultra Short and Guggenheim Floating 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 Ultra Short with a short position of Guggenheim Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Short and Guggenheim Floating.
Diversification Opportunities for Ultra Short and Guggenheim Floating
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ultra and Guggenheim is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Short Term Fixed and Guggenheim Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Floating Rate and Ultra Short 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 Ultra Short Term Fixed are associated (or correlated) with Guggenheim Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Floating Rate has no effect on the direction of Ultra Short i.e., Ultra Short and Guggenheim Floating go up and down completely randomly.
Pair Corralation between Ultra Short and Guggenheim Floating
Assuming the 90 days horizon Ultra Short is expected to generate 1.47 times less return on investment than Guggenheim Floating. But when comparing it to its historical volatility, Ultra Short Term Fixed is 3.33 times less risky than Guggenheim Floating. It trades about 0.49 of its potential returns per unit of risk. Guggenheim Floating Rate is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 2,127 in Guggenheim Floating Rate on August 31, 2024 and sell it today you would earn a total of 299.00 from holding Guggenheim Floating Rate or generate 14.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ultra Short Term Fixed vs. Guggenheim Floating Rate
Performance |
| Timeline |
| Ultra Short Term |
| Guggenheim Floating Rate |
Ultra Short and Guggenheim Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultra Short and Guggenheim Floating
The main advantage of trading using opposite Ultra Short and Guggenheim Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra Short position performs unexpectedly, Guggenheim Floating 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 Guggenheim Floating will offset losses from the drop in Guggenheim Floating's long position.| Ultra Short vs. Clearbridge Energy Mlp | Ultra Short vs. Dreyfus Natural Resources | Ultra Short vs. World Energy Fund | Ultra Short vs. Fidelity Advisor Energy |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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