Correlation Between Walthausen Small and Guggenheim Mid

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

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

Diversification Opportunities for Walthausen Small and Guggenheim Mid

0.98

Correlation Coefficient

Walthausen Small  Guggenheim Mid

Almost no diversification

The 3 months correlation between Walthausen and Guggenheim is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Walthausen Small Cap and Guggenheim Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Mid Cap and Walthausen 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 Walthausen Small Cap are associated (or correlated) with Guggenheim Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Mid Cap has no effect on the direction of Walthausen Small i.e., Walthausen Small and Guggenheim Mid go up and down completely randomly.

Pair Corralation between Walthausen Small and Guggenheim Mid

Assuming the 90 days horizon Walthausen Small Cap is expected to under-perform the Guggenheim Mid. In addition to that, Walthausen Small is 1.12 times more volatile than Guggenheim Mid Cap. It trades about -0.12 of its total potential returns per unit of risk. Guggenheim Mid Cap is currently generating about -0.1 per unit of volatility. If you would invest  3,702  in Guggenheim Mid Cap on January 16, 2025 and sell it today you would lose (402.00) from holding Guggenheim Mid Cap or give up 10.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.41%
Values	Daily Returns

Walthausen Small Cap  vs.  Guggenheim Mid Cap

Walthausen Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Walthausen Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Guggenheim Mid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guggenheim Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Walthausen Small and Guggenheim Mid

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

The idea behind Walthausen Small Cap and Guggenheim Mid Cap 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 Stocks Directory module to find actively traded stocks across global markets.