Correlation Between Bright Rock and Ladenburg Growth
Can any of the company-specific risk be diversified away by investing in both Bright Rock and Ladenburg 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 Bright Rock and Ladenburg Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bright Rock Mid and Ladenburg Growth, you can compare the effects of market volatilities on Bright Rock and Ladenburg 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 Bright Rock with a short position of Ladenburg Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bright Rock and Ladenburg Growth.
Diversification Opportunities for Bright Rock and Ladenburg Growth
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Bright and Ladenburg is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Bright Rock Mid and Ladenburg Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ladenburg Growth and Bright Rock 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 Bright Rock Mid are associated (or correlated) with Ladenburg Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ladenburg Growth has no effect on the direction of Bright Rock i.e., Bright Rock and Ladenburg Growth go up and down completely randomly.
Pair Corralation between Bright Rock and Ladenburg Growth
Assuming the 90 days horizon Bright Rock is expected to generate 1.45 times less return on investment than Ladenburg Growth. In addition to that, Bright Rock is 1.25 times more volatile than Ladenburg Growth. It trades about 0.05 of its total potential returns per unit of risk. Ladenburg Growth is currently generating about 0.09 per unit of volatility. If you would invest 1,382 in Ladenburg Growth on September 3, 2024 and sell it today you would earn a total of 527.00 from holding Ladenburg Growth or generate 38.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bright Rock Mid vs. Ladenburg Growth
Performance |
| Timeline |
| Bright Rock Mid |
| Ladenburg Growth |
Bright Rock and Ladenburg Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bright Rock and Ladenburg Growth
The main advantage of trading using opposite Bright Rock and Ladenburg Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bright Rock position performs unexpectedly, Ladenburg 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 Ladenburg Growth will offset losses from the drop in Ladenburg Growth's long position.| Bright Rock vs. Blackrock Sm Cap | Bright Rock vs. Principal Lifetime Hybrid | Bright Rock vs. Lord Abbett Diversified | Bright Rock vs. Wasatch Small Cap |
| Ladenburg Growth vs. T Rowe Price | Ladenburg Growth vs. Franklin High Yield | Ladenburg Growth vs. Limited Term Tax | Ladenburg Growth vs. Victory High Income |
Check out your portfolio center.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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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