Correlation Between LS 1x and VanEck Morningstar
Can any of the company-specific risk be diversified away by investing in both LS 1x and VanEck Morningstar 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 LS 1x and VanEck Morningstar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LS 1x Amazon and VanEck Morningstar SMID, you can compare the effects of market volatilities on LS 1x and VanEck Morningstar 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 LS 1x with a short position of VanEck Morningstar. Check out your portfolio center. Please also check ongoing floating volatility patterns of LS 1x and VanEck Morningstar.
Diversification Opportunities for LS 1x and VanEck Morningstar
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 1AMZ and VanEck is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding LS 1x Amazon and VanEck Morningstar SMID in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Morningstar SMID and LS 1x 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 LS 1x Amazon are associated (or correlated) with VanEck Morningstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Morningstar SMID has no effect on the direction of LS 1x i.e., LS 1x and VanEck Morningstar go up and down completely randomly.
Pair Corralation between LS 1x and VanEck Morningstar
Assuming the 90 days trading horizon LS 1x is expected to generate 1.4 times less return on investment than VanEck Morningstar. In addition to that, LS 1x is 1.59 times more volatile than VanEck Morningstar SMID. It trades about 0.13 of its total potential returns per unit of risk. VanEck Morningstar SMID is currently generating about 0.3 per unit of volatility. If you would invest 1,745 in VanEck Morningstar SMID on August 31, 2024 and sell it today you would earn a total of 149.00 from holding VanEck Morningstar SMID or generate 8.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LS 1x Amazon vs. VanEck Morningstar SMID
Performance |
| Timeline |
| LS 1x Amazon |
| VanEck Morningstar SMID |
LS 1x and VanEck Morningstar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LS 1x and VanEck Morningstar
The main advantage of trading using opposite LS 1x and VanEck Morningstar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LS 1x position performs unexpectedly, VanEck Morningstar 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 VanEck Morningstar will offset losses from the drop in VanEck Morningstar's long position.| LS 1x vs. Scottish Mortgage Investment | LS 1x vs. VinaCapital Vietnam Opportunity | LS 1x vs. Edinburgh Worldwide Investment | LS 1x vs. Baillie Gifford Growth |
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Check out your portfolio center.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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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