Correlation Between Guggenheim Styleplus and International Core

Can any of the company-specific risk be diversified away by investing in both Guggenheim Styleplus and International Core 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 Styleplus and International Core into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guggenheim Styleplus and International E Equity, you can compare the effects of market volatilities on Guggenheim Styleplus and International Core 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 Styleplus with a short position of International Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Styleplus and International Core.

Diversification Opportunities for Guggenheim Styleplus and International Core

0.9

Correlation Coefficient

Guggenheim Styleplus  International Core

Almost no diversification

The 3 months correlation between Guggenheim and International is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Styleplus and International E Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International E Equity and Guggenheim Styleplus 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 Styleplus are associated (or correlated) with International Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International E Equity has no effect on the direction of Guggenheim Styleplus i.e., Guggenheim Styleplus and International Core go up and down completely randomly.

Pair Corralation between Guggenheim Styleplus and International Core

Assuming the 90 days horizon Guggenheim Styleplus is expected to generate 1.05 times more return on investment than International Core. However, Guggenheim Styleplus is 1.05 times more volatile than International E Equity. It trades about 0.03 of its potential returns per unit of risk. International E Equity is currently generating about 0.03 per unit of risk. If you would invest  2,348  in Guggenheim Styleplus on June 18, 2024 and sell it today you would earn a total of  10.00  from holding Guggenheim Styleplus or generate 0.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Guggenheim Styleplus   vs.  International E Equity

Guggenheim Styleplus

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim Styleplus are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Guggenheim Styleplus is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

International E Equity

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in International E Equity are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, International Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Guggenheim Styleplus and International Core

The main advantage of trading using opposite Guggenheim Styleplus and International Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guggenheim Styleplus position performs unexpectedly, International Core 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 International Core will offset losses from the drop in International Core's long position.

The idea behind Guggenheim Styleplus and International E Equity 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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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.