Correlation Between Fabxx and Ladenburg Income

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

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

Diversification Opportunities for Fabxx and Ladenburg Income

0.35

Correlation Coefficient

Fabxx  Ladenburg Income

Weak diversification

The 3 months correlation between Fabxx and Ladenburg is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Fabxx and Ladenburg Income Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ladenburg Income Growth and Fabxx 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 Fabxx are associated (or correlated) with Ladenburg Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ladenburg Income Growth has no effect on the direction of Fabxx i.e., Fabxx and Ladenburg Income go up and down completely randomly.

Pair Corralation between Fabxx and Ladenburg Income

Assuming the 90 days horizon Fabxx is expected to generate 10.52 times more return on investment than Ladenburg Income. However, Fabxx is 10.52 times more volatile than Ladenburg Income Growth. It trades about 0.02 of its potential returns per unit of risk. Ladenburg Income Growth is currently generating about -0.14 per unit of risk. If you would invest  230.00  in Fabxx on December 2, 2024 and sell it today you would lose (75.00) from holding Fabxx or give up 32.61% of portfolio value over 90 days.

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

Fabxx  vs.  Ladenburg Income Growth

Fabxx

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fabxx are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Fabxx showed solid returns over the last few months and may actually be approaching a breakup point.

Ladenburg Income Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ladenburg Income Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Fabxx and Ladenburg Income

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

The idea behind Fabxx and Ladenburg Income Growth 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.