Correlation Between Leuthold E and Fpa Crescent

Can any of the company-specific risk be diversified away by investing in both Leuthold E and Fpa Crescent 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 Fpa Crescent 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 Fpa Crescent Fund, you can compare the effects of market volatilities on Leuthold E and Fpa Crescent 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 Fpa Crescent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leuthold E and Fpa Crescent.

Diversification Opportunities for Leuthold E and Fpa Crescent

-0.35

Correlation Coefficient

Leuthold E  Fpa Crescent

Very good diversification

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

Pair Corralation between Leuthold E and Fpa Crescent

Assuming the 90 days horizon Leuthold E Investment is expected to under-perform the Fpa Crescent. In addition to that, Leuthold E is 1.14 times more volatile than Fpa Crescent Fund. It trades about -0.01 of its total potential returns per unit of risk. Fpa Crescent Fund is currently generating about 0.08 per unit of volatility. If you would invest  4,008  in Fpa Crescent Fund on September 16, 2024 and sell it today you would earn a total of  332.00  from holding Fpa Crescent Fund or generate 8.28% return on investment over 90 days.

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

Leuthold E Investment  vs.  Fpa Crescent 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.

Fpa Crescent

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fpa Crescent Fund are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Fpa Crescent 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 Fpa Crescent

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

The idea behind Leuthold E Investment and Fpa Crescent 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.