Correlation Between Lgm Risk and Real Return
Can any of the company-specific risk be diversified away by investing in both Lgm Risk and Real Return 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 Lgm Risk and Real Return into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lgm Risk Managed and Real Return Fund, you can compare the effects of market volatilities on Lgm Risk and Real Return 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 Lgm Risk with a short position of Real Return. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lgm Risk and Real Return.
Diversification Opportunities for Lgm Risk and Real Return
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lgm and Real is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Lgm Risk Managed and Real Return Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Return Fund and Lgm Risk 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 Lgm Risk Managed are associated (or correlated) with Real Return. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Return Fund has no effect on the direction of Lgm Risk i.e., Lgm Risk and Real Return go up and down completely randomly.
Pair Corralation between Lgm Risk and Real Return
Assuming the 90 days horizon Lgm Risk is expected to generate 1.15 times less return on investment than Real Return. But when comparing it to its historical volatility, Lgm Risk Managed is 1.3 times less risky than Real Return. It trades about 0.06 of its potential returns per unit of risk. Real Return Fund is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,012 in Real Return Fund on September 12, 2024 and sell it today you would earn a total of 3.00 from holding Real Return Fund or generate 0.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lgm Risk Managed vs. Real Return Fund
Performance |
| Timeline |
| Lgm Risk Managed |
| Real Return Fund |
Lgm Risk and Real Return Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lgm Risk and Real Return
The main advantage of trading using opposite Lgm Risk and Real Return positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lgm Risk position performs unexpectedly, Real Return 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 Real Return will offset losses from the drop in Real Return's long position.| Lgm Risk vs. Guggenheim Diversified Income | Lgm Risk vs. Wealthbuilder Conservative Allocation | Lgm Risk vs. Jpmorgan Diversified Fund | Lgm Risk vs. Federated Hermes Conservative |
| Real Return vs. Barings Active Short | Real Return vs. Angel Oak Ultrashort | Real Return vs. Cmg Ultra Short | Real Return vs. Quantitative Longshort Equity |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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