Correlation Between Edgewood Growth and Loomis Sayles

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

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

Diversification Opportunities for Edgewood Growth and Loomis Sayles

0.41

Correlation Coefficient

Edgewood Growth  Loomis Sayles

Very weak diversification

The 3 months correlation between Edgewood and Loomis is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Edgewood Growth Fund and Loomis Sayles Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loomis Sayles Growth and Edgewood Growth 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 Edgewood Growth Fund 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 Growth has no effect on the direction of Edgewood Growth i.e., Edgewood Growth and Loomis Sayles go up and down completely randomly.

Pair Corralation between Edgewood Growth and Loomis Sayles

Assuming the 90 days horizon Edgewood Growth Fund is expected to under-perform the Loomis Sayles. In addition to that, Edgewood Growth is 1.79 times more volatile than Loomis Sayles Growth. It trades about -0.2 of its total potential returns per unit of risk. Loomis Sayles Growth is currently generating about -0.05 per unit of volatility. If you would invest  3,111  in Loomis Sayles Growth on September 29, 2024 and sell it today you would lose (83.00) from holding Loomis Sayles Growth or give up 2.67% of portfolio value over 90 days.

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

Edgewood Growth Fund  vs.  Loomis Sayles Growth

Edgewood Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Edgewood Growth Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Loomis Sayles Growth

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Loomis Sayles Growth are ranked lower than 5 (%) 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 Edgewood Growth and Loomis Sayles

The main advantage of trading using opposite Edgewood Growth and Loomis Sayles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edgewood Growth 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 Edgewood Growth Fund and Loomis Sayles 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 CEOs Directory module to screen CEOs from public companies around the world.