Correlation Between Large Cap and Lsv Small
Can any of the company-specific risk be diversified away by investing in both Large Cap and Lsv 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 Large Cap and Lsv Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Large Cap Growth Profund and Lsv Small Cap, you can compare the effects of market volatilities on Large Cap and Lsv 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 Large Cap with a short position of Lsv Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Large Cap and Lsv Small.
Diversification Opportunities for Large Cap and Lsv Small
Very poor diversification
The 3 months correlation between Large and Lsv is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Large Cap Growth Profund and Lsv Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lsv Small Cap and Large Cap 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 Large Cap Growth Profund are associated (or correlated) with Lsv Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lsv Small Cap has no effect on the direction of Large Cap i.e., Large Cap and Lsv Small go up and down completely randomly.
Pair Corralation between Large Cap and Lsv Small
Assuming the 90 days horizon Large Cap Growth Profund is expected to generate 0.82 times more return on investment than Lsv Small. However, Large Cap Growth Profund is 1.22 times less risky than Lsv Small. It trades about 0.12 of its potential returns per unit of risk. Lsv Small Cap is currently generating about 0.05 per unit of risk. If you would invest 2,708 in Large Cap Growth Profund on September 14, 2024 and sell it today you would earn a total of 1,992 from holding Large Cap Growth Profund or generate 73.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Large Cap Growth Profund vs. Lsv Small Cap
Performance |
| Timeline |
| Large Cap Growth |
| Lsv Small Cap |
Large Cap and Lsv Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Large Cap and Lsv Small
The main advantage of trading using opposite Large Cap and Lsv Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Large Cap position performs unexpectedly, Lsv 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 Lsv Small will offset losses from the drop in Lsv Small's long position.| Large Cap vs. Western Asset Municipal | Large Cap vs. Qs Large Cap | Large Cap vs. Rbc Microcap Value | Large Cap vs. Aam Select Income |
| Lsv Small vs. Amg Timessquare Mid | Lsv Small vs. Lsv Value Equity | Lsv Small vs. Baron Discovery Fund | Lsv Small vs. Victory Sycamore Established |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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