Correlation Between NYSE Composite and Litman Gregory
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Litman Gregory 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 NYSE Composite and Litman Gregory into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Litman Gregory Funds, you can compare the effects of market volatilities on NYSE Composite and Litman Gregory 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 NYSE Composite with a short position of Litman Gregory. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Litman Gregory.
Diversification Opportunities for NYSE Composite and Litman Gregory
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Litman is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Litman Gregory Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Litman Gregory Funds and NYSE Composite 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 NYSE Composite are associated (or correlated) with Litman Gregory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Litman Gregory Funds has no effect on the direction of NYSE Composite i.e., NYSE Composite and Litman Gregory go up and down completely randomly.
Pair Corralation between NYSE Composite and Litman Gregory
Assuming the 90 days trading horizon NYSE Composite is expected to generate 57.75 times less return on investment than Litman Gregory. But when comparing it to its historical volatility, NYSE Composite is 76.48 times less risky than Litman Gregory. It trades about 0.08 of its potential returns per unit of risk. Litman Gregory Funds is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 0.00 in Litman Gregory Funds on September 3, 2024 and sell it today you would earn a total of 1,207 from holding Litman Gregory Funds or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 64.24% |
| Values | Daily Returns |
NYSE Composite vs. Litman Gregory Funds
Performance |
| Timeline |
NYSE Composite and Litman Gregory Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Litman Gregory Funds
Pair trading matchups for Litman Gregory
Pair Trading with NYSE Composite and Litman Gregory
The main advantage of trading using opposite NYSE Composite and Litman Gregory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Litman Gregory 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 Litman Gregory will offset losses from the drop in Litman Gregory's long position.| NYSE Composite vs. Lindblad Expeditions Holdings | NYSE Composite vs. LB Foster | NYSE Composite vs. HUTCHMED DRC | NYSE Composite vs. Bridgford Foods |
| Litman Gregory vs. FT Vest Equity | Litman Gregory vs. Northern Lights | Litman Gregory vs. Dimensional International High | Litman Gregory vs. JPMorgan Fundamental Data |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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