Correlation Between Guggenheim Managed and Pimco Trends

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

Diversification Opportunities for Guggenheim Managed and Pimco Trends

0.84

Correlation Coefficient

Guggenheim Managed  Pimco Trends

Very poor diversification

The 3 months correlation between Guggenheim and Pimco is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Managed Futures and Pimco Trends Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Trends Managed 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 Pimco Trends. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Trends Managed has no effect on the direction of Guggenheim Managed i.e., Guggenheim Managed and Pimco Trends go up and down completely randomly.

Pair Corralation between Guggenheim Managed and Pimco Trends

Assuming the 90 days horizon Guggenheim Managed Futures is expected to generate 0.85 times more return on investment than Pimco Trends. However, Guggenheim Managed Futures is 1.18 times less risky than Pimco Trends. It trades about 0.08 of its potential returns per unit of risk. Pimco Trends Managed is currently generating about 0.06 per unit of risk. If you would invest  1,964  in Guggenheim Managed Futures on October 24, 2024 and sell it today you would earn a total of  53.00  from holding Guggenheim Managed Futures or generate 2.7% return on investment over 90 days.

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

Guggenheim Managed Futures  vs.  Pimco Trends Managed

Guggenheim Managed

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim Managed Futures are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. 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.

Pimco Trends Managed

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Trends Managed are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pimco Trends 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 Pimco Trends

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

The idea behind Guggenheim Managed Futures and Pimco Trends Managed 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.