Correlation Between Real Estate and Loomis Sayles

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

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

Diversification Opportunities for Real Estate and Loomis Sayles

-0.05

Correlation Coefficient

Real Estate  Loomis Sayles

Good diversification

The 3 months correlation between Real and Loomis is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Real Estate Ultrasector and Loomis Sayles Smallmid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loomis Sayles Smallmid and Real Estate 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 Real Estate Ultrasector are associated (or correlated) with Loomis Sayles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loomis Sayles Smallmid has no effect on the direction of Real Estate i.e., Real Estate and Loomis Sayles go up and down completely randomly.

Pair Corralation between Real Estate and Loomis Sayles

Assuming the 90 days horizon Real Estate is expected to generate 1.58 times less return on investment than Loomis Sayles. In addition to that, Real Estate is 1.7 times more volatile than Loomis Sayles Smallmid. It trades about 0.02 of its total potential returns per unit of risk. Loomis Sayles Smallmid is currently generating about 0.05 per unit of volatility. If you would invest  1,104  in Loomis Sayles Smallmid on September 28, 2024 and sell it today you would earn a total of  291.00  from holding Loomis Sayles Smallmid or generate 26.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Real Estate Ultrasector  vs.  Loomis Sayles Smallmid

Real Estate Ultrasector

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Real Estate Ultrasector has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Loomis Sayles Smallmid

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Loomis Sayles Smallmid are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Loomis Sayles is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Real Estate and Loomis Sayles

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

The idea behind Real Estate Ultrasector and Loomis Sayles Smallmid 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.