Correlation Between Tax-managed and Auer Growth

Can any of the company-specific risk be diversified away by investing in both Tax-managed and Auer Growth 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 Tax-managed and Auer Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tax Managed Mid Small and Auer Growth Fund, you can compare the effects of market volatilities on Tax-managed and Auer Growth 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 Tax-managed with a short position of Auer Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tax-managed and Auer Growth.

Diversification Opportunities for Tax-managed and Auer Growth

0.79

Correlation Coefficient

Tax-managed  Auer Growth

Poor diversification

The 3 months correlation between Tax-managed and AUER is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Tax Managed Mid Small and Auer Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auer Growth Fund and Tax-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 Tax Managed Mid Small are associated (or correlated) with Auer Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auer Growth Fund has no effect on the direction of Tax-managed i.e., Tax-managed and Auer Growth go up and down completely randomly.

Pair Corralation between Tax-managed and Auer Growth

Assuming the 90 days horizon Tax-managed is expected to generate 1.32 times less return on investment than Auer Growth. In addition to that, Tax-managed is 1.27 times more volatile than Auer Growth Fund. It trades about 0.13 of its total potential returns per unit of risk. Auer Growth Fund is currently generating about 0.21 per unit of volatility. If you would invest  1,277  in Auer Growth Fund on May 7, 2025 and sell it today you would earn a total of  144.00  from holding Auer Growth Fund or generate 11.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Tax Managed Mid Small  vs.  Auer Growth Fund

Tax Managed Mid

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Tax Managed Mid Small are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Tax-managed may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Auer Growth Fund

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Auer Growth Fund are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Auer Growth may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Tax-managed and Auer Growth

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

The idea behind Tax Managed Mid Small and Auer Growth 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.