Correlation Between Ladenburg Growth and Bright Rock
Can any of the company-specific risk be diversified away by investing in both Ladenburg Growth and Bright Rock 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 Ladenburg Growth and Bright Rock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ladenburg Growth and Bright Rock Mid, you can compare the effects of market volatilities on Ladenburg Growth and Bright Rock 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 Ladenburg Growth with a short position of Bright Rock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ladenburg Growth and Bright Rock.
Diversification Opportunities for Ladenburg Growth and Bright Rock
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Ladenburg and Bright is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Ladenburg Growth and Bright Rock Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bright Rock Mid and Ladenburg Growth 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 Ladenburg Growth are associated (or correlated) with Bright Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bright Rock Mid has no effect on the direction of Ladenburg Growth i.e., Ladenburg Growth and Bright Rock go up and down completely randomly.
Pair Corralation between Ladenburg Growth and Bright Rock
Assuming the 90 days horizon Ladenburg Growth is expected to generate 0.89 times more return on investment than Bright Rock. However, Ladenburg Growth is 1.12 times less risky than Bright Rock. It trades about 0.15 of its potential returns per unit of risk. Bright Rock Mid is currently generating about 0.14 per unit of risk. If you would invest 1,678 in Ladenburg Growth on September 1, 2024 and sell it today you would earn a total of 231.00 from holding Ladenburg Growth or generate 13.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ladenburg Growth vs. Bright Rock Mid
Performance |
| Timeline |
| Ladenburg Growth |
| Bright Rock Mid |
Ladenburg Growth and Bright Rock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ladenburg Growth and Bright Rock
The main advantage of trading using opposite Ladenburg Growth and Bright Rock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ladenburg Growth position performs unexpectedly, Bright Rock 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 Bright Rock will offset losses from the drop in Bright Rock's long position.| Ladenburg Growth vs. Ladenburg Income Fundclass | Ladenburg Growth vs. Ladenburg Income Fundclass | Ladenburg Growth vs. Ladenburg Income Fundclass | Ladenburg Growth vs. Ladenburg Income Growth |
| Bright Rock vs. Quantitative Longshort Equity | Bright Rock vs. Old Westbury Short Term | Bright Rock vs. Franklin Federal Limited Term | Bright Rock vs. Aqr Sustainable Long Short |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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