Correlation Between Pioneer Municipal and Guggenheim Taxable

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

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

Diversification Opportunities for Pioneer Municipal and Guggenheim Taxable

0.29

Correlation Coefficient

Pioneer Municipal  Guggenheim Taxable

Modest diversification

The 3 months correlation between Pioneer and Guggenheim is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Pioneer Municipal High and Guggenheim Taxable Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Taxable and Pioneer Municipal 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 Pioneer Municipal High are associated (or correlated) with Guggenheim Taxable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Taxable has no effect on the direction of Pioneer Municipal i.e., Pioneer Municipal and Guggenheim Taxable go up and down completely randomly.

Pair Corralation between Pioneer Municipal and Guggenheim Taxable

Considering the 90-day investment horizon Pioneer Municipal High is expected to generate 0.64 times more return on investment than Guggenheim Taxable. However, Pioneer Municipal High is 1.56 times less risky than Guggenheim Taxable. It trades about 0.08 of its potential returns per unit of risk. Guggenheim Taxable Municipal is currently generating about -0.17 per unit of risk. If you would invest  934.00  in Pioneer Municipal High on September 3, 2024 and sell it today you would earn a total of  26.00  from holding Pioneer Municipal High or generate 2.78% return on investment over 90 days.

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

Pioneer Municipal High  vs.  Guggenheim Taxable Municipal

Pioneer Municipal High

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pioneer Municipal High are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Pioneer Municipal is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Guggenheim Taxable

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guggenheim Taxable Municipal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with Pioneer Municipal and Guggenheim Taxable

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

The idea behind Pioneer Municipal High and Guggenheim Taxable Municipal 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.