Correlation Between American Funds and Ladenburg Income

Can any of the company-specific risk be diversified away by investing in both American Funds and Ladenburg Income 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 American Funds and Ladenburg Income into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between American Funds Fundamental and Ladenburg Income Growth, you can compare the effects of market volatilities on American Funds and Ladenburg Income 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 American Funds with a short position of Ladenburg Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Ladenburg Income.

Diversification Opportunities for American Funds and Ladenburg Income

0.68

Correlation Coefficient

American Funds  Ladenburg Income

Poor diversification

The 3 months correlation between American and Ladenburg is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Fundamental and Ladenburg Income Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ladenburg Income Growth and American Funds 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 American Funds Fundamental are associated (or correlated) with Ladenburg Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ladenburg Income Growth has no effect on the direction of American Funds i.e., American Funds and Ladenburg Income go up and down completely randomly.

Pair Corralation between American Funds and Ladenburg Income

Assuming the 90 days horizon American Funds Fundamental is expected to generate 1.92 times more return on investment than Ladenburg Income. However, American Funds is 1.92 times more volatile than Ladenburg Income Growth. It trades about 0.19 of its potential returns per unit of risk. Ladenburg Income Growth is currently generating about 0.03 per unit of risk. If you would invest  8,345  in American Funds Fundamental on September 17, 2024 and sell it today you would earn a total of  750.00  from holding American Funds Fundamental or generate 8.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

American Funds Fundamental  vs.  Ladenburg Income Growth

American Funds Funda

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Funds Fundamental are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, American Funds may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ladenburg Income Growth

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ladenburg Income Growth are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ladenburg Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with American Funds and Ladenburg Income

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

The idea behind American Funds Fundamental and Ladenburg Income Growth 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.