Correlation Between Guggenheim Risk and Small Midcap

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Can any of the company-specific risk be diversified away by investing in both Guggenheim Risk and Small Midcap 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 Risk and Small Midcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guggenheim Risk Managed and Small Midcap Dividend Income, you can compare the effects of market volatilities on Guggenheim Risk and Small Midcap 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 Risk with a short position of Small Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Risk and Small Midcap.

Diversification Opportunities for Guggenheim Risk and Small Midcap

0.43
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Guggenheim and Small is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Risk Managed and Small Midcap Dividend Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Midcap Dividend and Guggenheim Risk 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 Risk Managed are associated (or correlated) with Small Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Midcap Dividend has no effect on the direction of Guggenheim Risk i.e., Guggenheim Risk and Small Midcap go up and down completely randomly.

Pair Corralation between Guggenheim Risk and Small Midcap

If you would invest  1,694  in Small Midcap Dividend Income on May 1, 2025 and sell it today you would earn a total of  174.00  from holding Small Midcap Dividend Income or generate 10.27% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy98.39%
ValuesDaily Returns

Guggenheim Risk Managed  vs.  Small Midcap Dividend Income

 Performance 
       Timeline  
Guggenheim Risk Managed 

Risk-Adjusted Performance

Very Weak

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

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Small Midcap Dividend Income are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Small Midcap may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Guggenheim Risk and Small Midcap Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Guggenheim Risk and Small Midcap

The main advantage of trading using opposite Guggenheim Risk and Small Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guggenheim Risk position performs unexpectedly, Small Midcap 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 Small Midcap will offset losses from the drop in Small Midcap's long position.
The idea behind Guggenheim Risk Managed and Small Midcap Dividend Income 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.

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