Correlation Between Lkcm Small and Lkcm Balanced
Can any of the company-specific risk be diversified away by investing in both Lkcm Small and Lkcm Balanced 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 Lkcm Balanced 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 Lkcm Balanced Fund, you can compare the effects of market volatilities on Lkcm Small and Lkcm Balanced 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 Lkcm Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lkcm Small and Lkcm Balanced.
Diversification Opportunities for Lkcm Small and Lkcm Balanced
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lkcm and Lkcm is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Lkcm Small Cap and Lkcm Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lkcm Balanced 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 Lkcm Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lkcm Balanced has no effect on the direction of Lkcm Small i.e., Lkcm Small and Lkcm Balanced go up and down completely randomly.
Pair Corralation between Lkcm Small and Lkcm Balanced
Assuming the 90 days horizon Lkcm Small Cap is expected to under-perform the Lkcm Balanced. In addition to that, Lkcm Small is 1.96 times more volatile than Lkcm Balanced Fund. It trades about -0.13 of its total potential returns per unit of risk. Lkcm Balanced Fund is currently generating about -0.1 per unit of volatility. If you would invest 2,864 in Lkcm Balanced Fund on October 21, 2024 and sell it today you would lose (59.00) from holding Lkcm Balanced Fund or give up 2.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lkcm Small Cap vs. Lkcm Balanced Fund
Performance |
| Timeline |
| Lkcm Small Cap |
| Lkcm Balanced |
Lkcm Small and Lkcm Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lkcm Small and Lkcm Balanced
The main advantage of trading using opposite Lkcm Small and Lkcm Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lkcm Small position performs unexpectedly, Lkcm Balanced 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 Balanced will offset losses from the drop in Lkcm Balanced's long position.| Lkcm Small vs. Sp Smallcap 600 | Lkcm Small vs. Artisan Small Cap | Lkcm Small vs. Tax Managed Mid Small | Lkcm Small vs. Ab Small Cap |
| Lkcm Balanced vs. Mairs Power Balanced | Lkcm Balanced vs. Lkcm Equity Fund | Lkcm Balanced vs. Boston Trust Asset | Lkcm Balanced vs. Value Line Asset |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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