Correlation Between Lkcm International and Lkcm Small
Can any of the company-specific risk be diversified away by investing in both Lkcm International and Lkcm 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 Lkcm International and Lkcm Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lkcm International Equity and Lkcm Small Cap, you can compare the effects of market volatilities on Lkcm International and Lkcm 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 Lkcm International with a short position of Lkcm Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lkcm International and Lkcm Small.
Diversification Opportunities for Lkcm International and Lkcm Small
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lkcm and Lkcm is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Lkcm International Equity and Lkcm Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lkcm Small Cap and Lkcm International 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 Lkcm International Equity are associated (or correlated) with Lkcm Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lkcm Small Cap has no effect on the direction of Lkcm International i.e., Lkcm International and Lkcm Small go up and down completely randomly.
Pair Corralation between Lkcm International and Lkcm Small
Assuming the 90 days horizon Lkcm International Equity is expected to under-perform the Lkcm Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Lkcm International Equity is 1.63 times less risky than Lkcm Small. The mutual fund trades about -0.13 of its potential returns per unit of risk. The Lkcm Small Cap is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,135 in Lkcm Small Cap on August 30, 2024 and sell it today you would earn a total of 249.00 from holding Lkcm Small Cap or generate 11.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lkcm International Equity vs. Lkcm Small Cap
Performance |
| Timeline |
| Lkcm International Equity |
| Lkcm Small Cap |
Lkcm International and Lkcm Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lkcm International and Lkcm Small
The main advantage of trading using opposite Lkcm International and Lkcm Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lkcm International position performs unexpectedly, Lkcm 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 Lkcm Small will offset losses from the drop in Lkcm Small's long position.| Lkcm International vs. Us Government Securities | Lkcm International vs. Us Government Securities | Lkcm International vs. Inverse Government Long | Lkcm International vs. Dreyfus Government Cash |
| Lkcm Small vs. Putnam Equity Income | Lkcm Small vs. Putnam Growth Opportunities | Lkcm Small vs. HUMANA INC | Lkcm Small vs. Aquagold International |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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