Correlation Between Cabana Target and Leuthold Core

Can any of the company-specific risk be diversified away by investing in both Cabana Target and Leuthold Core 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 Cabana Target and Leuthold Core into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cabana Target Drawdown and Leuthold Core ETF, you can compare the effects of market volatilities on Cabana Target and Leuthold Core 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 Cabana Target with a short position of Leuthold Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cabana Target and Leuthold Core.

Diversification Opportunities for Cabana Target and Leuthold Core

0.96

Correlation Coefficient

Cabana Target  Leuthold Core

Almost no diversification

The 3 months correlation between Cabana and Leuthold is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Cabana Target Drawdown and Leuthold Core ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leuthold Core ETF and Cabana Target 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 Cabana Target Drawdown are associated (or correlated) with Leuthold Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leuthold Core ETF has no effect on the direction of Cabana Target i.e., Cabana Target and Leuthold Core go up and down completely randomly.

Pair Corralation between Cabana Target and Leuthold Core

Given the investment horizon of 90 days Cabana Target Drawdown is expected to generate 1.19 times more return on investment than Leuthold Core. However, Cabana Target is 1.19 times more volatile than Leuthold Core ETF. It trades about 0.16 of its potential returns per unit of risk. Leuthold Core ETF is currently generating about 0.17 per unit of risk. If you would invest  2,473  in Cabana Target Drawdown on September 1, 2024 and sell it today you would earn a total of  128.00  from holding Cabana Target Drawdown or generate 5.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Cabana Target Drawdown  vs.  Leuthold Core ETF

Cabana Target Drawdown

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cabana Target Drawdown are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Cabana Target is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Leuthold Core ETF

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Leuthold Core ETF are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Leuthold Core is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Cabana Target and Leuthold Core

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

The idea behind Cabana Target Drawdown and Leuthold Core ETF 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.