Correlation Between Leisure Fund and Great-west Loomis

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

By analyzing existing cross correlation between Leisure Fund Class and Great West Loomis Sayles, you can compare the effects of market volatilities on Leisure Fund and Great-west Loomis 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 Leisure Fund with a short position of Great-west Loomis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leisure Fund and Great-west Loomis.

Diversification Opportunities for Leisure Fund and Great-west Loomis

0.4

Correlation Coefficient

Leisure Fund  Great-west Loomis

Very weak diversification

The 3 months correlation between Leisure and Great-west is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Leisure Fund Class and Great West Loomis Sayles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Loomis and Leisure Fund 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 Leisure Fund Class are associated (or correlated) with Great-west Loomis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Loomis has no effect on the direction of Leisure Fund i.e., Leisure Fund and Great-west Loomis go up and down completely randomly.

Pair Corralation between Leisure Fund and Great-west Loomis

Assuming the 90 days horizon Leisure Fund Class is expected to generate 1.03 times more return on investment than Great-west Loomis. However, Leisure Fund is 1.03 times more volatile than Great West Loomis Sayles. It trades about -0.02 of its potential returns per unit of risk. Great West Loomis Sayles is currently generating about -0.1 per unit of risk. If you would invest  8,110  in Leisure Fund Class on December 23, 2024 and sell it today you would lose (134.00) from holding Leisure Fund Class or give up 1.65% of portfolio value over 90 days.

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

Leisure Fund Class  vs.  Great West Loomis Sayles

Leisure Fund Class

Risk-Adjusted Performance

Very Weak

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

Great West Loomis

Risk-Adjusted Performance

Very Weak

Over the last 90 days Great West Loomis Sayles has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 Leisure Fund and Great-west Loomis

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

The idea behind Leisure Fund Class and Great West Loomis Sayles 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.