Correlation Between American Funds and LSI Software
Can any of the company-specific risk be diversified away by investing in both American Funds and LSI Software 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 American Funds and LSI Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Fundamental and LSI Software SA, you can compare the effects of market volatilities on American Funds and LSI Software 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 American Funds with a short position of LSI Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and LSI Software.
Diversification Opportunities for American Funds and LSI Software
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and LSI is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Fundamental and LSI Software SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LSI Software SA and American Funds 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 American Funds Fundamental are associated (or correlated) with LSI Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LSI Software SA has no effect on the direction of American Funds i.e., American Funds and LSI Software go up and down completely randomly.
Pair Corralation between American Funds and LSI Software
Assuming the 90 days horizon American Funds is expected to generate 1.34 times less return on investment than LSI Software. But when comparing it to its historical volatility, American Funds Fundamental is 3.62 times less risky than LSI Software. It trades about 0.2 of its potential returns per unit of risk. LSI Software SA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,570 in LSI Software SA on November 3, 2024 and sell it today you would earn a total of 70.00 from holding LSI Software SA or generate 4.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
American Funds Fundamental vs. LSI Software SA
Performance |
| Timeline |
| American Funds Funda |
| LSI Software SA |
American Funds and LSI Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and LSI Software
The main advantage of trading using opposite American Funds and LSI Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, LSI Software 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 LSI Software will offset losses from the drop in LSI Software's long position.| American Funds vs. Federated Emerging Market | American Funds vs. Siit Emerging Markets | American Funds vs. Mid Cap 15x Strategy | American Funds vs. Ashmore Emerging Markets |
| LSI Software vs. Quantum Software SA | LSI Software vs. Detalion Games SA | LSI Software vs. Movie Games SA | LSI Software vs. Altustfi |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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