Correlation Between Guggenheim Strategic and Small Cap

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

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

Diversification Opportunities for Guggenheim Strategic and Small Cap

0.95

Correlation Coefficient

Guggenheim Strategic  Small Cap

Almost no diversification

The 3 months correlation between Guggenheim and Small is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Strategic Opportuni and Small Cap Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Core and Guggenheim Strategic 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 Strategic Opportunities are associated (or correlated) with Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Core has no effect on the direction of Guggenheim Strategic i.e., Guggenheim Strategic and Small Cap go up and down completely randomly.

Pair Corralation between Guggenheim Strategic and Small Cap

Considering the 90-day investment horizon Guggenheim Strategic is expected to generate 1.61 times less return on investment than Small Cap. But when comparing it to its historical volatility, Guggenheim Strategic Opportunities is 2.33 times less risky than Small Cap. It trades about 0.19 of its potential returns per unit of risk. Small Cap Core is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,086  in Small Cap Core on May 5, 2025 and sell it today you would earn a total of  103.00  from holding Small Cap Core or generate 9.48% return on investment over 90 days.

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

Guggenheim Strategic Opportuni  vs.  Small Cap Core

Guggenheim Strategic

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim Strategic Opportunities are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Guggenheim Strategic is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Small Cap Core

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Small Cap Core are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Small Cap may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Guggenheim Strategic and Small Cap

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

The idea behind Guggenheim Strategic Opportunities and Small Cap Core 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.