Correlation Between 1290 Gamco and Lebenthal Lisanti

Can any of the company-specific risk be diversified away by investing in both 1290 Gamco and Lebenthal Lisanti 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 1290 Gamco and Lebenthal Lisanti into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 1290 Gamco Smallmid and Lebenthal Lisanti Small, you can compare the effects of market volatilities on 1290 Gamco and Lebenthal Lisanti 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 1290 Gamco with a short position of Lebenthal Lisanti. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1290 Gamco and Lebenthal Lisanti.

Diversification Opportunities for 1290 Gamco and Lebenthal Lisanti

0.73

Correlation Coefficient

1290 Gamco  Lebenthal Lisanti

Poor diversification

The 3 months correlation between 1290 and Lebenthal is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding 1290 Gamco Smallmid and Lebenthal Lisanti Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lebenthal Lisanti Small and 1290 Gamco 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 1290 Gamco Smallmid are associated (or correlated) with Lebenthal Lisanti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lebenthal Lisanti Small has no effect on the direction of 1290 Gamco i.e., 1290 Gamco and Lebenthal Lisanti go up and down completely randomly.

Pair Corralation between 1290 Gamco and Lebenthal Lisanti

Assuming the 90 days horizon 1290 Gamco Smallmid is expected to generate 0.83 times more return on investment than Lebenthal Lisanti. However, 1290 Gamco Smallmid is 1.2 times less risky than Lebenthal Lisanti. It trades about 0.09 of its potential returns per unit of risk. Lebenthal Lisanti Small is currently generating about 0.06 per unit of risk. If you would invest  1,668  in 1290 Gamco Smallmid on June 22, 2024 and sell it today you would earn a total of  134.00  from holding 1290 Gamco Smallmid or generate 8.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

1290 Gamco Smallmid  vs.  Lebenthal Lisanti Small

1290 Gamco Smallmid

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 1290 Gamco Smallmid are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, 1290 Gamco may actually be approaching a critical reversion point that can send shares even higher in October 2024.

Lebenthal Lisanti Small

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lebenthal Lisanti Small are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Lebenthal Lisanti may actually be approaching a critical reversion point that can send shares even higher in October 2024.

Pair Trading with 1290 Gamco and Lebenthal Lisanti

The main advantage of trading using opposite 1290 Gamco and Lebenthal Lisanti positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1290 Gamco position performs unexpectedly, Lebenthal Lisanti 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 Lebenthal Lisanti will offset losses from the drop in Lebenthal Lisanti's long position.

The idea behind 1290 Gamco Smallmid and Lebenthal Lisanti Small 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.