Correlation Between Lkcm Small and Ab Select
Can any of the company-specific risk be diversified away by investing in both Lkcm Small and Ab Select 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 Small and Ab Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lkcm Small Cap and Ab Select Equity, you can compare the effects of market volatilities on Lkcm Small and Ab Select 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 Small with a short position of Ab Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lkcm Small and Ab Select.
Diversification Opportunities for Lkcm Small and Ab Select
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lkcm and AUUIX is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Lkcm Small Cap and Ab Select Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Select Equity and Lkcm Small 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 Small Cap are associated (or correlated) with Ab Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Select Equity has no effect on the direction of Lkcm Small i.e., Lkcm Small and Ab Select go up and down completely randomly.
Pair Corralation between Lkcm Small and Ab Select
Assuming the 90 days horizon Lkcm Small is expected to generate 1.58 times less return on investment than Ab Select. In addition to that, Lkcm Small is 1.17 times more volatile than Ab Select Equity. It trades about 0.12 of its total potential returns per unit of risk. Ab Select Equity is currently generating about 0.23 per unit of volatility. If you would invest 2,157 in Ab Select Equity on November 3, 2024 and sell it today you would earn a total of 80.00 from holding Ab Select Equity or generate 3.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lkcm Small Cap vs. Ab Select Equity
Performance |
| Timeline |
| Lkcm Small Cap |
| Ab Select Equity |
Lkcm Small and Ab Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lkcm Small and Ab Select
The main advantage of trading using opposite Lkcm Small and Ab Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lkcm Small position performs unexpectedly, Ab Select 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 Ab Select will offset losses from the drop in Ab Select's long position.| Lkcm Small vs. Fulcrum Diversified Absolute | Lkcm Small vs. Jhancock Diversified Macro | Lkcm Small vs. Stone Ridge Diversified | Lkcm Small vs. Wilmington Diversified Income |
| Ab Select vs. Davis Financial Fund | Ab Select vs. Fidelity Advisor Financial | Ab Select vs. Angel Oak Financial | Ab Select vs. Cref Money Market |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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