Correlation Between Growth Portfolio and Laudus Us

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

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

Diversification Opportunities for Growth Portfolio and Laudus Us

0.3

Correlation Coefficient

Growth Portfolio  Laudus Us

Weak diversification

The 3 months correlation between Growth and Laudus is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Growth Portfolio Class and Laudus Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laudus Large Cap and Growth Portfolio 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 Growth Portfolio Class are associated (or correlated) with Laudus Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laudus Large Cap has no effect on the direction of Growth Portfolio i.e., Growth Portfolio and Laudus Us go up and down completely randomly.

Pair Corralation between Growth Portfolio and Laudus Us

Assuming the 90 days horizon Growth Portfolio Class is expected to generate 1.21 times more return on investment than Laudus Us. However, Growth Portfolio is 1.21 times more volatile than Laudus Large Cap. It trades about -0.01 of its potential returns per unit of risk. Laudus Large Cap is currently generating about -0.1 per unit of risk. If you would invest  5,231  in Growth Portfolio Class on December 1, 2024 and sell it today you would lose (118.00) from holding Growth Portfolio Class or give up 2.26% of portfolio value over 90 days.

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

Growth Portfolio Class  vs.  Laudus Large Cap

Growth Portfolio Class

Risk-Adjusted Performance

Very Weak

Over the last 90 days Growth Portfolio Class has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Growth Portfolio is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Laudus Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Laudus Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Growth Portfolio and Laudus Us

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

The idea behind Growth Portfolio Class and Laudus Large Cap 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.