Correlation Between Guggenheim Taxable and Aberdeen Global

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

By analyzing existing cross correlation between Guggenheim Taxable Municipal and Aberdeen Global Dynamic, you can compare the effects of market volatilities on Guggenheim Taxable and Aberdeen Global 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 Taxable with a short position of Aberdeen Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Taxable and Aberdeen Global.

Diversification Opportunities for Guggenheim Taxable and Aberdeen Global

0.78

Correlation Coefficient

Guggenheim Taxable  Aberdeen Global

Poor diversification

The 3 months correlation between Guggenheim and Aberdeen is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Taxable Municipal and Aberdeen Global Dynamic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Global Dynamic and Guggenheim Taxable 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 Taxable Municipal are associated (or correlated) with Aberdeen Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Global Dynamic has no effect on the direction of Guggenheim Taxable i.e., Guggenheim Taxable and Aberdeen Global go up and down completely randomly.

Pair Corralation between Guggenheim Taxable and Aberdeen Global

Given the investment horizon of 90 days Guggenheim Taxable is expected to generate 2.17 times less return on investment than Aberdeen Global. In addition to that, Guggenheim Taxable is 1.13 times more volatile than Aberdeen Global Dynamic. It trades about 0.11 of its total potential returns per unit of risk. Aberdeen Global Dynamic is currently generating about 0.28 per unit of volatility. If you would invest  998.00  in Aberdeen Global Dynamic on December 4, 2024 and sell it today you would earn a total of  37.00  from holding Aberdeen Global Dynamic or generate 3.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Guggenheim Taxable Municipal  vs.  Aberdeen Global Dynamic

Guggenheim Taxable

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim Taxable Municipal are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Guggenheim Taxable is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Aberdeen Global Dynamic

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Global Dynamic are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound technical and fundamental indicators, Aberdeen Global is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Guggenheim Taxable and Aberdeen Global

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

The idea behind Guggenheim Taxable Municipal and Aberdeen Global Dynamic 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.