Correlation Between Litman Gregory and Crafword Dividend

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

By analyzing existing cross correlation between Litman Gregory Masters and Crafword Dividend Growth, you can compare the effects of market volatilities on Litman Gregory and Crafword Dividend 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 Litman Gregory with a short position of Crafword Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Litman Gregory and Crafword Dividend.

Diversification Opportunities for Litman Gregory and Crafword Dividend

-0.41

Correlation Coefficient

Litman Gregory  Crafword Dividend

Very good diversification

The 3 months correlation between Litman and Crafword is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Litman Gregory Masters and Crafword Dividend Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crafword Dividend Growth and Litman Gregory 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 Litman Gregory Masters are associated (or correlated) with Crafword Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crafword Dividend Growth has no effect on the direction of Litman Gregory i.e., Litman Gregory and Crafword Dividend go up and down completely randomly.

Pair Corralation between Litman Gregory and Crafword Dividend

Assuming the 90 days horizon Litman Gregory is expected to generate 1.16 times less return on investment than Crafword Dividend. But when comparing it to its historical volatility, Litman Gregory Masters is 4.52 times less risky than Crafword Dividend. It trades about 0.15 of its potential returns per unit of risk. Crafword Dividend Growth is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,260  in Crafword Dividend Growth on February 12, 2025 and sell it today you would earn a total of  186.00  from holding Crafword Dividend Growth or generate 14.76% return on investment over 90 days.

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

Litman Gregory Masters  vs.  Crafword Dividend Growth

Litman Gregory Masters

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Litman Gregory Masters are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Litman Gregory is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Crafword Dividend Growth

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Litman Gregory and Crafword Dividend

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

The idea behind Litman Gregory Masters and Crafword Dividend 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.