Correlation Between First Investors and Litman Gregory
Can any of the company-specific risk be diversified away by investing in both First Investors 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 First Investors and Litman Gregory into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Investors Opportunity and Litman Gregory Masters, you can compare the effects of market volatilities on First Investors 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 First Investors with a short position of Litman Gregory. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Investors and Litman Gregory.
Diversification Opportunities for First Investors and Litman Gregory
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Litman is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding First Investors Opportunity and Litman Gregory Masters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Litman Gregory Masters and First Investors 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 First Investors Opportunity 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 Masters has no effect on the direction of First Investors i.e., First Investors and Litman Gregory go up and down completely randomly.
Pair Corralation between First Investors and Litman Gregory
Assuming the 90 days horizon First Investors Opportunity is expected to under-perform the Litman Gregory. But the mutual fund apears to be less risky and, when comparing its historical volatility, First Investors Opportunity is 1.15 times less risky than Litman Gregory. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Litman Gregory Masters is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,729 in Litman Gregory Masters on December 28, 2024 and sell it today you would earn a total of 133.00 from holding Litman Gregory Masters or generate 7.69% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
First Investors Opportunity vs. Litman Gregory Masters
Performance |
Timeline |
First Investors Oppo |
Litman Gregory Masters |
First Investors and Litman Gregory Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Investors and Litman Gregory
The main advantage of trading using opposite First Investors and Litman Gregory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Investors 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.First Investors vs. Doubleline Total Return | First Investors vs. Ambrus Core Bond | First Investors vs. Transamerica Bond Class | First Investors vs. Ab Bond Inflation |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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