Correlation Between Guggenheim Managed and Short-term Income

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

Diversification Opportunities for Guggenheim Managed and Short-term Income

-0.45

Correlation Coefficient

Guggenheim Managed  Short-term Income

Very good diversification

The 3 months correlation between Guggenheim and Short-term is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Managed Futures and Short Term Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Term Income 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 Short-term Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Term Income has no effect on the direction of Guggenheim Managed i.e., Guggenheim Managed and Short-term Income go up and down completely randomly.

Pair Corralation between Guggenheim Managed and Short-term Income

Assuming the 90 days horizon Guggenheim Managed Futures is expected to under-perform the Short-term Income. In addition to that, Guggenheim Managed is 3.23 times more volatile than Short Term Income Fund. It trades about -0.1 of its total potential returns per unit of risk. Short Term Income Fund is currently generating about -0.08 per unit of volatility. If you would invest  1,017  in Short Term Income Fund on December 23, 2024 and sell it today you would lose (12.00) from holding Short Term Income Fund or give up 1.18% of portfolio value over 90 days.

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

Guggenheim Managed Futures  vs.  Short Term Income Fund

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.

Short Term Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Short Term Income Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Short-term Income 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 Short-term Income

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

The idea behind Guggenheim Managed Futures and Short Term Income Fund 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.