Correlation Between Ladenburg Growth and New Economy
Can any of the company-specific risk be diversified away by investing in both Ladenburg Growth and New Economy 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 New Economy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ladenburg Growth and New Economy Fund, you can compare the effects of market volatilities on Ladenburg Growth and New Economy 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 New Economy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ladenburg Growth and New Economy.
Diversification Opportunities for Ladenburg Growth and New Economy
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ladenburg and New is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Ladenburg Growth and New Economy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Economy Fund 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 New Economy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Economy Fund has no effect on the direction of Ladenburg Growth i.e., Ladenburg Growth and New Economy go up and down completely randomly.
Pair Corralation between Ladenburg Growth and New Economy
Assuming the 90 days horizon Ladenburg Growth is expected to generate 0.81 times more return on investment than New Economy. However, Ladenburg Growth is 1.23 times less risky than New Economy. It trades about 0.4 of its potential returns per unit of risk. New Economy Fund is currently generating about 0.18 per unit of risk. If you would invest 1,798 in Ladenburg Growth on September 1, 2024 and sell it today you would earn a total of 111.00 from holding Ladenburg Growth or generate 6.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ladenburg Growth vs. New Economy Fund
Performance |
| Timeline |
| Ladenburg Growth |
| New Economy Fund |
Ladenburg Growth and New Economy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ladenburg Growth and New Economy
The main advantage of trading using opposite Ladenburg Growth and New Economy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ladenburg Growth position performs unexpectedly, New Economy 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 New Economy will offset losses from the drop in New Economy'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 |
| New Economy vs. Qs Small Capitalization | New Economy vs. Small Pany Growth | New Economy vs. Champlain Small | New Economy vs. The Hartford Small |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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