Correlation Between American Funds and Ladenburg Aggressive
Can any of the company-specific risk be diversified away by investing in both American Funds and Ladenburg Aggressive 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 American Funds and Ladenburg Aggressive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Growth and Ladenburg Aggressive Growth, you can compare the effects of market volatilities on American Funds and Ladenburg Aggressive 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 American Funds with a short position of Ladenburg Aggressive. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Ladenburg Aggressive.
Diversification Opportunities for American Funds and Ladenburg Aggressive
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Ladenburg is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Growth and Ladenburg Aggressive Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ladenburg Aggressive and American Funds 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 American Funds Growth are associated (or correlated) with Ladenburg Aggressive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ladenburg Aggressive has no effect on the direction of American Funds i.e., American Funds and Ladenburg Aggressive go up and down completely randomly.
Pair Corralation between American Funds and Ladenburg Aggressive
Assuming the 90 days horizon American Funds Growth is expected to generate 0.84 times more return on investment than Ladenburg Aggressive. However, American Funds Growth is 1.19 times less risky than Ladenburg Aggressive. It trades about -0.08 of its potential returns per unit of risk. Ladenburg Aggressive Growth is currently generating about -0.11 per unit of risk. If you would invest 2,672 in American Funds Growth on October 20, 2024 and sell it today you would lose (71.00) from holding American Funds Growth or give up 2.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.0% |
| Values | Daily Returns |
American Funds Growth vs. Ladenburg Aggressive Growth
Performance |
| Timeline |
| American Funds Growth |
| Ladenburg Aggressive |
American Funds and Ladenburg Aggressive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Ladenburg Aggressive
The main advantage of trading using opposite American Funds and Ladenburg Aggressive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Ladenburg Aggressive 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 Aggressive will offset losses from the drop in Ladenburg Aggressive's long position.| American Funds vs. Doubleline Total Return | American Funds vs. Blrc Sgy Mnp | American Funds vs. Barings High Yield | American Funds vs. Enhanced Fixed Income |
| Ladenburg Aggressive vs. Fidelity Large Cap | Ladenburg Aggressive vs. Qs Large Cap | Ladenburg Aggressive vs. Avantis Large Cap | Ladenburg Aggressive vs. Guidemark Large Cap |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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