Correlation Between Berwyn Income and Leuthold E

Can any of the company-specific risk be diversified away by investing in both Berwyn Income and Leuthold E 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 Berwyn Income and Leuthold E into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Berwyn Income Fund and Leuthold E Investment, you can compare the effects of market volatilities on Berwyn Income and Leuthold E 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 Berwyn Income with a short position of Leuthold E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berwyn Income and Leuthold E.

Diversification Opportunities for Berwyn Income and Leuthold E

0.24

Correlation Coefficient

Berwyn Income  Leuthold E

Modest diversification

The 3 months correlation between Berwyn and Leuthold is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Berwyn Income Fund and Leuthold E Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leuthold E Investment and Berwyn Income 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 Berwyn Income Fund are associated (or correlated) with Leuthold E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leuthold E Investment has no effect on the direction of Berwyn Income i.e., Berwyn Income and Leuthold E go up and down completely randomly.

Pair Corralation between Berwyn Income and Leuthold E

Assuming the 90 days horizon Berwyn Income is expected to generate 1.63 times less return on investment than Leuthold E. But when comparing it to its historical volatility, Berwyn Income Fund is 2.07 times less risky than Leuthold E. It trades about 0.36 of its potential returns per unit of risk. Leuthold E Investment is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  2,124  in Leuthold E Investment on October 20, 2024 and sell it today you would earn a total of  58.00  from holding Leuthold E Investment or generate 2.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Berwyn Income Fund  vs.  Leuthold E Investment

Berwyn Income

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Berwyn Income Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Berwyn Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Leuthold E Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leuthold E Investment has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Leuthold E is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Berwyn Income and Leuthold E

The main advantage of trading using opposite Berwyn Income and Leuthold E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berwyn Income position performs unexpectedly, Leuthold E 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 Leuthold E will offset losses from the drop in Leuthold E's long position.

The idea behind Berwyn Income Fund and Leuthold E Investment 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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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.