Correlation Between Lebenthal Lisanti and Hodges Small
Can any of the company-specific risk be diversified away by investing in both Lebenthal Lisanti and Hodges Small 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 Lebenthal Lisanti and Hodges Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lebenthal Lisanti Small and Hodges Small Cap, you can compare the effects of market volatilities on Lebenthal Lisanti and Hodges Small 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 Lebenthal Lisanti with a short position of Hodges Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lebenthal Lisanti and Hodges Small.
Diversification Opportunities for Lebenthal Lisanti and Hodges Small
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lebenthal and Hodges is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Lebenthal Lisanti Small and Hodges Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hodges Small Cap and Lebenthal Lisanti 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 Lebenthal Lisanti Small are associated (or correlated) with Hodges Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hodges Small Cap has no effect on the direction of Lebenthal Lisanti i.e., Lebenthal Lisanti and Hodges Small go up and down completely randomly.
Pair Corralation between Lebenthal Lisanti and Hodges Small
Assuming the 90 days horizon Lebenthal Lisanti is expected to generate 1.14 times less return on investment than Hodges Small. In addition to that, Lebenthal Lisanti is 1.11 times more volatile than Hodges Small Cap. It trades about 0.24 of its total potential returns per unit of risk. Hodges Small Cap is currently generating about 0.3 per unit of volatility. If you would invest 2,391 in Hodges Small Cap on August 28, 2024 and sell it today you would earn a total of 246.00 from holding Hodges Small Cap or generate 10.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Lebenthal Lisanti Small vs. Hodges Small Cap
Performance |
| Timeline |
| Lebenthal Lisanti Small |
| Hodges Small Cap |
Lebenthal Lisanti and Hodges Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lebenthal Lisanti and Hodges Small
The main advantage of trading using opposite Lebenthal Lisanti and Hodges Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lebenthal Lisanti position performs unexpectedly, Hodges Small 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 Hodges Small will offset losses from the drop in Hodges Small's long position.| Lebenthal Lisanti vs. Lord Abbett Growth | Lebenthal Lisanti vs. Queens Road Small | Lebenthal Lisanti vs. Eaton Vance Large Cap |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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