Correlation Between Tax-managed and Us Global

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

By analyzing existing cross correlation between Tax Managed Large Cap and Us Global Investors, you can compare the effects of market volatilities on Tax-managed and Us 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 Tax-managed with a short position of Us Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tax-managed and Us Global.

Diversification Opportunities for Tax-managed and Us Global

0.8

Correlation Coefficient

Tax-managed  Us Global

Very poor diversification

The 3 months correlation between Tax-managed and USLUX is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Tax Managed Large Cap and Us Global Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Global Investors and Tax-managed 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 Tax Managed Large Cap are associated (or correlated) with Us Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Global Investors has no effect on the direction of Tax-managed i.e., Tax-managed and Us Global go up and down completely randomly.

Pair Corralation between Tax-managed and Us Global

Assuming the 90 days horizon Tax Managed Large Cap is expected to generate 0.68 times more return on investment than Us Global. However, Tax Managed Large Cap is 1.48 times less risky than Us Global. It trades about 0.18 of its potential returns per unit of risk. Us Global Investors is currently generating about 0.11 per unit of risk. If you would invest  7,400  in Tax Managed Large Cap on September 3, 2024 and sell it today you would earn a total of  589.00  from holding Tax Managed Large Cap or generate 7.96% return on investment over 90 days.

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

Tax Managed Large Cap  vs.  Us Global Investors

Tax Managed Large

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tax Managed Large Cap are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Tax-managed may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Us Global Investors

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Us Global Investors are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Us Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Tax-managed and Us Global

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

The idea behind Tax Managed Large Cap and Us Global Investors 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.