Correlation Between Dow 2x and Loomis Sayles

Can any of the company-specific risk be diversified away by investing in both Dow 2x 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 Dow 2x and Loomis Sayles into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dow 2x Strategy and Loomis Sayles Senior, you can compare the effects of market volatilities on Dow 2x 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 Dow 2x with a short position of Loomis Sayles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow 2x and Loomis Sayles.

Diversification Opportunities for Dow 2x and Loomis Sayles

0.67

Correlation Coefficient

Dow 2x  Loomis Sayles

Poor diversification

The 3 months correlation between Dow and Loomis is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Dow 2x Strategy and Loomis Sayles Senior in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loomis Sayles Senior and Dow 2x 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 Dow 2x Strategy 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 Senior has no effect on the direction of Dow 2x i.e., Dow 2x and Loomis Sayles go up and down completely randomly.

Pair Corralation between Dow 2x and Loomis Sayles

Assuming the 90 days horizon Dow 2x Strategy is expected to under-perform the Loomis Sayles. In addition to that, Dow 2x is 10.48 times more volatile than Loomis Sayles Senior. It trades about -0.32 of its total potential returns per unit of risk. Loomis Sayles Senior is currently generating about -0.25 per unit of volatility. If you would invest  828.00  in Loomis Sayles Senior on October 9, 2024 and sell it today you would lose (7.00) from holding Loomis Sayles Senior or give up 0.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

Dow 2x Strategy  vs.  Loomis Sayles Senior

Dow 2x Strategy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dow 2x Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Dow 2x is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Loomis Sayles Senior

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Loomis Sayles Senior are ranked lower than 4 (%) 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.

Pair Trading with Dow 2x and Loomis Sayles

The main advantage of trading using opposite Dow 2x and Loomis Sayles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow 2x 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 Dow 2x Strategy and Loomis Sayles Senior 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.