Correlation Between Materials Portfolio and Ladenburg Growth
Can any of the company-specific risk be diversified away by investing in both Materials Portfolio 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 Materials Portfolio and Ladenburg Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Materials Portfolio Fidelity and Ladenburg Growth Income, you can compare the effects of market volatilities on Materials Portfolio 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 Materials Portfolio with a short position of Ladenburg Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Materials Portfolio and Ladenburg Growth.
Diversification Opportunities for Materials Portfolio and Ladenburg Growth
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Materials and Ladenburg is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Materials Portfolio Fidelity and Ladenburg Growth Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ladenburg Growth Income and Materials Portfolio 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 Materials Portfolio Fidelity 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 Income has no effect on the direction of Materials Portfolio i.e., Materials Portfolio and Ladenburg Growth go up and down completely randomly.
Pair Corralation between Materials Portfolio and Ladenburg Growth
Assuming the 90 days horizon Materials Portfolio is expected to generate 2.32 times less return on investment than Ladenburg Growth. In addition to that, Materials Portfolio is 1.98 times more volatile than Ladenburg Growth Income. It trades about 0.04 of its total potential returns per unit of risk. Ladenburg Growth Income is currently generating about 0.17 per unit of volatility. If you would invest 1,414 in Ladenburg Growth Income on September 2, 2024 and sell it today you would earn a total of 160.00 from holding Ladenburg Growth Income or generate 11.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Materials Portfolio Fidelity vs. Ladenburg Growth Income
Performance |
| Timeline |
| Materials Portfolio |
| Ladenburg Growth Income |
Materials Portfolio and Ladenburg Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Materials Portfolio and Ladenburg Growth
The main advantage of trading using opposite Materials Portfolio and Ladenburg Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Materials Portfolio 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.The idea behind Materials Portfolio Fidelity and Ladenburg Growth Income 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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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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