Correlation Between Guggenheim Managed and Tax-free Conservative

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

Diversification Opportunities for Guggenheim Managed and Tax-free Conservative

-0.73

Correlation Coefficient

Guggenheim Managed  Tax-free Conservative

Pay attention - limited upside

The 3 months correlation between Guggenheim and Tax-Free is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Managed Futures and Tax Free Conservative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tax Free Conservative 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 Tax-free Conservative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tax Free Conservative has no effect on the direction of Guggenheim Managed i.e., Guggenheim Managed and Tax-free Conservative go up and down completely randomly.

Pair Corralation between Guggenheim Managed and Tax-free Conservative

Assuming the 90 days horizon Guggenheim Managed Futures is expected to under-perform the Tax-free Conservative. In addition to that, Guggenheim Managed is 12.26 times more volatile than Tax Free Conservative. It trades about -0.09 of its total potential returns per unit of risk. Tax Free Conservative is currently generating about 0.18 per unit of volatility. If you would invest  995.00  in Tax Free Conservative on December 21, 2024 and sell it today you would earn a total of  7.00  from holding Tax Free Conservative or generate 0.7% return on investment over 90 days.

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

Guggenheim Managed Futures  vs.  Tax Free Conservative

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.

Tax Free Conservative

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tax Free Conservative are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Tax-free Conservative 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 Tax-free Conservative

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

The idea behind Guggenheim Managed Futures and Tax Free Conservative 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.