Correlation Between Gateway Equity and Loomis Sayles

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

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

Diversification Opportunities for Gateway Equity and Loomis Sayles

0.98

Correlation Coefficient

Gateway Equity  Loomis Sayles

Almost no diversification

The 3 months correlation between Gateway and Loomis is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Gateway Equity Call and Loomis Sayles Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loomis Sayles Growth and Gateway Equity 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 Gateway Equity Call are associated (or correlated) with Loomis Sayles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loomis Sayles Growth has no effect on the direction of Gateway Equity i.e., Gateway Equity and Loomis Sayles go up and down completely randomly.

Pair Corralation between Gateway Equity and Loomis Sayles

Assuming the 90 days horizon Gateway Equity Call is expected to generate 0.56 times more return on investment than Loomis Sayles. However, Gateway Equity Call is 1.78 times less risky than Loomis Sayles. It trades about -0.07 of its potential returns per unit of risk. Loomis Sayles Growth is currently generating about -0.11 per unit of risk. If you would invest  1,968  in Gateway Equity Call on December 29, 2024 and sell it today you would lose (74.00) from holding Gateway Equity Call or give up 3.76% of portfolio value over 90 days.

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

Gateway Equity Call  vs.  Loomis Sayles Growth

Gateway Equity Call

Risk-Adjusted Performance

Very Weak

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

Loomis Sayles Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Loomis Sayles 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 Gateway Equity and Loomis Sayles

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

The idea behind Gateway Equity Call and Loomis Sayles 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.