Correlation Between Leuthold Core and Leuthold Select

Can any of the company-specific risk be diversified away by investing in both Leuthold Core 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 Leuthold Core and Leuthold Select 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 Leuthold Select Industries, you can compare the effects of market volatilities on Leuthold Core 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 Leuthold Core with a short position of Leuthold Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leuthold Core and Leuthold Select.

Diversification Opportunities for Leuthold Core and Leuthold Select

0.28

Correlation Coefficient

Leuthold Core  Leuthold Select

Modest diversification

The 3 months correlation between Leuthold and Leuthold is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Leuthold E Investment 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 Leuthold Core 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 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 Leuthold Core i.e., Leuthold Core and Leuthold Select go up and down completely randomly.

Pair Corralation between Leuthold Core and Leuthold Select

Assuming the 90 days horizon Leuthold E Investment is expected to under-perform the Leuthold Select. In addition to that, Leuthold Core is 1.63 times more volatile than Leuthold Select Industries. It trades about -0.02 of its total potential returns per unit of risk. Leuthold Select Industries is currently generating about 0.17 per unit of volatility. If you would invest  3,350  in Leuthold Select Industries on December 29, 2024 and sell it today you would earn a total of  130.00  from holding Leuthold Select Industries or generate 3.88% return on investment over 90 days.

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

Leuthold E Investment  vs.  Leuthold Select Industries

Leuthold E Investment

Risk-Adjusted Performance

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 Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Leuthold Select Indu

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Leuthold Select Industries are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Leuthold Select 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 Core and Leuthold Select

The main advantage of trading using opposite Leuthold Core and Leuthold Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leuthold Core 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 Leuthold E Investment 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.