Correlation Between Loomis Sayles and Gateway Equity

Can any of the company-specific risk be diversified away by investing in both Loomis Sayles and Gateway Equity 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 Loomis Sayles and Gateway Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Loomis Sayles Senior and Gateway Equity Call, you can compare the effects of market volatilities on Loomis Sayles and Gateway Equity 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 Loomis Sayles with a short position of Gateway Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loomis Sayles and Gateway Equity.

Diversification Opportunities for Loomis Sayles and Gateway Equity

0.9

Correlation Coefficient

Loomis Sayles  Gateway Equity

Almost no diversification

The 3 months correlation between Loomis and Gateway is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Loomis Sayles Senior and Gateway Equity Call in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gateway Equity Call and Loomis Sayles 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 Loomis Sayles Senior are associated (or correlated) with Gateway Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gateway Equity Call has no effect on the direction of Loomis Sayles i.e., Loomis Sayles and Gateway Equity go up and down completely randomly.

Pair Corralation between Loomis Sayles and Gateway Equity

Assuming the 90 days horizon Loomis Sayles Senior is expected to under-perform the Gateway Equity. But the mutual fund apears to be less risky and, when comparing its historical volatility, Loomis Sayles Senior is 3.83 times less risky than Gateway Equity. The mutual fund trades about -0.2 of its potential returns per unit of risk. The Gateway Equity Call is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  2,002  in Gateway Equity Call on September 23, 2024 and sell it today you would lose (6.00) from holding Gateway Equity Call or give up 0.3% of portfolio value over 90 days.

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

Loomis Sayles Senior  vs.  Gateway Equity Call

Loomis Sayles Senior

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Loomis Sayles Senior are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Loomis Sayles is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gateway Equity Call

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gateway Equity Call are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Gateway Equity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Loomis Sayles and Gateway Equity

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

The idea behind Loomis Sayles Senior and Gateway Equity Call 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.