Correlation Between Grizzly Short and Leuthold Select

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

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

Diversification Opportunities for Grizzly Short and Leuthold Select

0.67

Correlation Coefficient

Grizzly Short  Leuthold Select

Poor diversification

The 3 months correlation between Grizzly and Leuthold is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Grizzly Short Fund and Leuthold Select Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leuthold Select Indu and Grizzly Short 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 Grizzly Short Fund are associated (or correlated) with Leuthold Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leuthold Select Indu has no effect on the direction of Grizzly Short i.e., Grizzly Short and Leuthold Select go up and down completely randomly.

Pair Corralation between Grizzly Short and Leuthold Select

Assuming the 90 days horizon Grizzly Short Fund is expected to under-perform the Leuthold Select. But the mutual fund apears to be less risky and, when comparing its historical volatility, Grizzly Short Fund is 1.49 times less risky than Leuthold Select. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Leuthold Select Industries is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,478  in Leuthold Select Industries on September 17, 2024 and sell it today you would lose (2.00) from holding Leuthold Select Industries or give up 0.06% of portfolio value over 90 days.

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

Grizzly Short Fund  vs.  Leuthold Select Industries

Grizzly Short

Risk-Adjusted Performance

0 of 100

Very Weak

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

Leuthold Select Indu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leuthold Select Industries has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 Grizzly Short and Leuthold Select

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

The idea behind Grizzly Short Fund and Leuthold Select Industries 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.