Correlation Between Guggenheim Managed and Principal Lifetime

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

By analyzing existing cross correlation between Guggenheim Managed Futures and Principal Lifetime Hybrid, you can compare the effects of market volatilities on Guggenheim Managed and Principal Lifetime 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 Managed with a short position of Principal Lifetime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Managed and Principal Lifetime.

Diversification Opportunities for Guggenheim Managed and Principal Lifetime

-0.32

Correlation Coefficient

Guggenheim Managed  Principal Lifetime

Very good diversification

The 3 months correlation between Guggenheim and Principal is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Managed Futures and Principal Lifetime Hybrid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Principal Lifetime Hybrid and Guggenheim 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 Guggenheim Managed Futures are associated (or correlated) with Principal Lifetime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Principal Lifetime Hybrid has no effect on the direction of Guggenheim Managed i.e., Guggenheim Managed and Principal Lifetime go up and down completely randomly.

Pair Corralation between Guggenheim Managed and Principal Lifetime

Assuming the 90 days horizon Guggenheim Managed Futures is expected to under-perform the Principal Lifetime. But the mutual fund apears to be less risky and, when comparing its historical volatility, Guggenheim Managed Futures is 1.04 times less risky than Principal Lifetime. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Principal Lifetime Hybrid is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  1,754  in Principal Lifetime Hybrid on December 2, 2024 and sell it today you would lose (33.00) from holding Principal Lifetime Hybrid or give up 1.88% of portfolio value over 90 days.

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

Guggenheim Managed Futures  vs.  Principal Lifetime Hybrid

Guggenheim Managed

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guggenheim Managed Futures has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Guggenheim Managed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Principal Lifetime Hybrid

Risk-Adjusted Performance

Very Weak

Over the last 90 days Principal Lifetime Hybrid has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Principal Lifetime is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Guggenheim Managed and Principal Lifetime

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

The idea behind Guggenheim Managed Futures and Principal Lifetime Hybrid 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.