Correlation Between Leuthold E and Berwyn Income

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

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

Diversification Opportunities for Leuthold E and Berwyn Income

0.09

Correlation Coefficient

Leuthold E  Berwyn Income

Significant diversification

The 3 months correlation between Leuthold and Berwyn is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Leuthold E Investment and Berwyn Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berwyn Income and Leuthold E 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 Leuthold E Investment are associated (or correlated) with Berwyn Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berwyn Income has no effect on the direction of Leuthold E i.e., Leuthold E and Berwyn Income go up and down completely randomly.

Pair Corralation between Leuthold E and Berwyn Income

Assuming the 90 days horizon Leuthold E Investment is expected to under-perform the Berwyn Income. In addition to that, Leuthold E is 2.96 times more volatile than Berwyn Income Fund. It trades about -0.1 of its total potential returns per unit of risk. Berwyn Income Fund is currently generating about -0.04 per unit of volatility. If you would invest  1,342  in Berwyn Income Fund on September 16, 2024 and sell it today you would lose (10.00) from holding Berwyn Income Fund or give up 0.75% of portfolio value over 90 days.

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

Leuthold E Investment  vs.  Berwyn Income Fund

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.

Berwyn Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Berwyn Income Fund has generated negative risk-adjusted returns adding no value to fund investors. 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.

Pair Trading with Leuthold E and Berwyn Income

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

The idea behind Leuthold E Investment and Berwyn Income Fund 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.