Correlation Between Thornburg Income and Guggenheim Taxable

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

By analyzing existing cross correlation between Thornburg Income Builder and Guggenheim Taxable Municipal, you can compare the effects of market volatilities on Thornburg Income and Guggenheim Taxable 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 Thornburg Income with a short position of Guggenheim Taxable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thornburg Income and Guggenheim Taxable.

Diversification Opportunities for Thornburg Income and Guggenheim Taxable

0.64

Correlation Coefficient

Thornburg Income  Guggenheim Taxable

Poor diversification

The 3 months correlation between Thornburg and Guggenheim is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Thornburg Income Builder and Guggenheim Taxable Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Taxable and Thornburg Income 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 Thornburg Income Builder are associated (or correlated) with Guggenheim Taxable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Taxable has no effect on the direction of Thornburg Income i.e., Thornburg Income and Guggenheim Taxable go up and down completely randomly.

Pair Corralation between Thornburg Income and Guggenheim Taxable

Given the investment horizon of 90 days Thornburg Income Builder is expected to generate 0.91 times more return on investment than Guggenheim Taxable. However, Thornburg Income Builder is 1.1 times less risky than Guggenheim Taxable. It trades about -0.04 of its potential returns per unit of risk. Guggenheim Taxable Municipal is currently generating about -0.17 per unit of risk. If you would invest  1,708  in Thornburg Income Builder on September 5, 2024 and sell it today you would lose (34.00) from holding Thornburg Income Builder or give up 1.99% of portfolio value over 90 days.

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

Thornburg Income Builder  vs.  Guggenheim Taxable Municipal

Thornburg Income Builder

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thornburg Income Builder has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Thornburg Income is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Guggenheim Taxable

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guggenheim Taxable Municipal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with Thornburg Income and Guggenheim Taxable

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

The idea behind Thornburg Income Builder and Guggenheim Taxable Municipal 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.