Correlation Between Leuthold Core and Leuthold Global

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

Diversification Opportunities for Leuthold Core and Leuthold Global

0.94

Correlation Coefficient

Leuthold Core  Leuthold Global

Almost no diversification

The 3 months correlation between Leuthold and Leuthold is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Leuthold E Investment and Leuthold Global Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leuthold Global 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 Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leuthold Global has no effect on the direction of Leuthold Core i.e., Leuthold Core and Leuthold Global go up and down completely randomly.

Pair Corralation between Leuthold Core and Leuthold Global

Assuming the 90 days horizon Leuthold E Investment is expected to under-perform the Leuthold Global. In addition to that, Leuthold Core is 1.1 times more volatile than Leuthold Global Fund. It trades about -0.11 of its total potential returns per unit of risk. Leuthold Global Fund is currently generating about -0.03 per unit of volatility. If you would invest  900.00  in Leuthold Global Fund on November 28, 2024 and sell it today you would lose (8.00) from holding Leuthold Global Fund or give up 0.89% of portfolio value over 90 days.

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

Leuthold E Investment  vs.  Leuthold Global Fund

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 forward 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 Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days Leuthold Global Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Leuthold Global 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 Global

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

The idea behind Leuthold E Investment and Leuthold Global 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.