Correlation Between Guggenheim Taxable and Guggenheim Active

Can any of the company-specific risk be diversified away by investing in both Guggenheim Taxable and Guggenheim Active 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 Guggenheim Active 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 Guggenheim Active Allocation, you can compare the effects of market volatilities on Guggenheim Taxable and Guggenheim Active 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 Guggenheim Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Taxable and Guggenheim Active.

Diversification Opportunities for Guggenheim Taxable and Guggenheim Active

0.79

Correlation Coefficient

Guggenheim Taxable  Guggenheim Active

Poor diversification

The 3 months correlation between Guggenheim and Guggenheim is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Taxable Municipal and Guggenheim Active Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Active 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 Guggenheim Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Active has no effect on the direction of Guggenheim Taxable i.e., Guggenheim Taxable and Guggenheim Active go up and down completely randomly.

Pair Corralation between Guggenheim Taxable and Guggenheim Active

Given the investment horizon of 90 days Guggenheim Taxable is expected to generate 1.31 times less return on investment than Guggenheim Active. But when comparing it to its historical volatility, Guggenheim Taxable Municipal is 1.34 times less risky than Guggenheim Active. It trades about 0.08 of its potential returns per unit of risk. Guggenheim Active Allocation is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,460  in Guggenheim Active Allocation on December 30, 2024 and sell it today you would earn a total of  58.00  from holding Guggenheim Active Allocation or generate 3.97% return on investment over 90 days.

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

Guggenheim Taxable Municipal  vs.  Guggenheim Active Allocation

Guggenheim Taxable

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim Taxable Municipal are ranked lower than 6 (%) 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.

Guggenheim Active

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim Active Allocation are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Guggenheim Active is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Guggenheim Taxable and Guggenheim Active

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

The idea behind Guggenheim Taxable Municipal and Guggenheim Active Allocation 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 Valuation module to check real value of public entities based on technical and fundamental data.