Correlation Between Lkcm Small and Glg Intl
Can any of the company-specific risk be diversified away by investing in both Lkcm Small and Glg Intl 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 Glg Intl 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 Glg Intl Small, you can compare the effects of market volatilities on Lkcm Small and Glg Intl 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 Glg Intl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lkcm Small and Glg Intl.
Diversification Opportunities for Lkcm Small and Glg Intl
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lkcm and Glg is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Lkcm Small Cap and Glg Intl Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glg Intl Small 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 Glg Intl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glg Intl Small has no effect on the direction of Lkcm Small i.e., Lkcm Small and Glg Intl go up and down completely randomly.
Pair Corralation between Lkcm Small and Glg Intl
Assuming the 90 days horizon Lkcm Small Cap is expected to under-perform the Glg Intl. In addition to that, Lkcm Small is 1.51 times more volatile than Glg Intl Small. It trades about -0.16 of its total potential returns per unit of risk. Glg Intl Small is currently generating about 0.11 per unit of volatility. If you would invest 8,516 in Glg Intl Small on November 3, 2024 and sell it today you would earn a total of 395.00 from holding Glg Intl Small or generate 4.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lkcm Small Cap vs. Glg Intl Small
Performance |
| Timeline |
| Lkcm Small Cap |
| Glg Intl Small |
Lkcm Small and Glg Intl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lkcm Small and Glg Intl
The main advantage of trading using opposite Lkcm Small and Glg Intl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lkcm Small position performs unexpectedly, Glg Intl 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 Glg Intl will offset losses from the drop in Glg Intl'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 |
| Glg Intl vs. Hunter Small Cap | Glg Intl vs. Ab Small Cap | Glg Intl vs. Df Dent Small | Glg Intl vs. Needham Small Cap |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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