Correlation Between Alphabet and Loomis Sayles

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

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

Diversification Opportunities for Alphabet and Loomis Sayles

0.85

Correlation Coefficient

Alphabet  Loomis Sayles

Very poor diversification

The 3 months correlation between Alphabet and Loomis is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C 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 Alphabet 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 Alphabet Inc Class C 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 Alphabet i.e., Alphabet and Loomis Sayles go up and down completely randomly.

Pair Corralation between Alphabet and Loomis Sayles

Given the investment horizon of 90 days Alphabet is expected to generate 1.89 times less return on investment than Loomis Sayles. In addition to that, Alphabet is 1.52 times more volatile than Loomis Sayles Growth. It trades about 0.08 of its total potential returns per unit of risk. Loomis Sayles Growth is currently generating about 0.24 per unit of volatility. If you would invest  2,671  in Loomis Sayles Growth on September 2, 2024 and sell it today you would earn a total of  430.00  from holding Loomis Sayles Growth or generate 16.1% return on investment over 90 days.

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

Alphabet Inc Class C  vs.  Loomis Sayles Growth

Alphabet Class C

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Alphabet may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Loomis Sayles Growth

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Loomis Sayles Growth are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Loomis Sayles showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alphabet and Loomis Sayles

The main advantage of trading using opposite Alphabet and Loomis Sayles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet 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 Alphabet Inc Class C 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.