Correlation Between Ladenburg Growth and Kensington Active
Can any of the company-specific risk be diversified away by investing in both Ladenburg Growth and Kensington Active 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 Kensington Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ladenburg Growth and Kensington Active Advantage, you can compare the effects of market volatilities on Ladenburg Growth and Kensington Active 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 Kensington Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ladenburg Growth and Kensington Active.
Diversification Opportunities for Ladenburg Growth and Kensington Active
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Ladenburg and Kensington is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Ladenburg Growth and Kensington Active Advantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kensington Active 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 Kensington Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kensington Active has no effect on the direction of Ladenburg Growth i.e., Ladenburg Growth and Kensington Active go up and down completely randomly.
Pair Corralation between Ladenburg Growth and Kensington Active
Assuming the 90 days horizon Ladenburg Growth is expected to generate 1.66 times more return on investment than Kensington Active. However, Ladenburg Growth is 1.66 times more volatile than Kensington Active Advantage. It trades about 0.11 of its potential returns per unit of risk. Kensington Active Advantage is currently generating about 0.11 per unit of risk. If you would invest 1,491 in Ladenburg Growth on September 3, 2024 and sell it today you would earn a total of 418.00 from holding Ladenburg Growth or generate 28.03% 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. Kensington Active Advantage
Performance |
| Timeline |
| Ladenburg Growth |
| Kensington Active |
Ladenburg Growth and Kensington Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ladenburg Growth and Kensington Active
The main advantage of trading using opposite Ladenburg Growth and Kensington Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ladenburg Growth position performs unexpectedly, Kensington Active 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 Kensington Active will offset losses from the drop in Kensington Active's long position.| 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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