Correlation Between Laudus Large and Intech Managed

Can any of the company-specific risk be diversified away by investing in both Laudus Large and Intech Managed 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 Laudus Large and Intech Managed into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Laudus Large Cap and Intech Managed Volatility, you can compare the effects of market volatilities on Laudus Large and Intech Managed 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 Laudus Large with a short position of Intech Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laudus Large and Intech Managed.

Diversification Opportunities for Laudus Large and Intech Managed

0.92

Correlation Coefficient

Laudus Large  Intech Managed

Almost no diversification

The 3 months correlation between Laudus and Intech is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Laudus Large Cap and Intech Managed Volatility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intech Managed Volatility and Laudus Large 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 Laudus Large Cap are associated (or correlated) with Intech Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intech Managed Volatility has no effect on the direction of Laudus Large i.e., Laudus Large and Intech Managed go up and down completely randomly.

Pair Corralation between Laudus Large and Intech Managed

Assuming the 90 days horizon Laudus Large Cap is expected to generate 1.15 times more return on investment than Intech Managed. However, Laudus Large is 1.15 times more volatile than Intech Managed Volatility. It trades about 0.21 of its potential returns per unit of risk. Intech Managed Volatility is currently generating about 0.07 per unit of risk. If you would invest  2,585  in Laudus Large Cap on September 13, 2024 and sell it today you would earn a total of  332.00  from holding Laudus Large Cap or generate 12.84% return on investment over 90 days.

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

Laudus Large Cap  vs.  Intech Managed Volatility

Laudus Large Cap

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Laudus Large Cap are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Laudus Large may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Intech Managed Volatility

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Intech Managed Volatility are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Intech Managed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Laudus Large and Intech Managed

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

The idea behind Laudus Large Cap and Intech Managed Volatility 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 Transaction History module to view history of all your transactions and understand their impact on performance.