Correlation Between Merger Fund and Leuthold E

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

By analyzing existing cross correlation between The Merger Fund and Leuthold E Investment, you can compare the effects of market volatilities on Merger Fund and Leuthold E 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 Merger Fund with a short position of Leuthold E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merger Fund and Leuthold E.

Diversification Opportunities for Merger Fund and Leuthold E

0.51

Correlation Coefficient

Merger Fund  Leuthold E

Very weak diversification

The 3 months correlation between Merger and Leuthold is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding The Merger Fund and Leuthold E Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leuthold E Investment and Merger 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 The Merger Fund are associated (or correlated) with Leuthold E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leuthold E Investment has no effect on the direction of Merger Fund i.e., Merger Fund and Leuthold E go up and down completely randomly.

Pair Corralation between Merger Fund and Leuthold E

Assuming the 90 days horizon The Merger Fund is expected to generate 0.2 times more return on investment than Leuthold E. However, The Merger Fund is 4.89 times less risky than Leuthold E. It trades about -0.04 of its potential returns per unit of risk. Leuthold E Investment is currently generating about -0.14 per unit of risk. If you would invest  1,762  in The Merger Fund on September 13, 2024 and sell it today you would lose (6.00) from holding The Merger Fund or give up 0.34% of portfolio value over 90 days.

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

The Merger Fund  vs.  Leuthold E Investment

Merger Fund

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Merger Fund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Merger Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Leuthold E Investment

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Merger Fund and Leuthold E

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

The idea behind The Merger Fund and Leuthold E Investment 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.