Correlation Between Lkcm Small and Lkcm International
Can any of the company-specific risk be diversified away by investing in both Lkcm Small and Lkcm International 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 International 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 International Equity, you can compare the effects of market volatilities on Lkcm Small and Lkcm International 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 International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lkcm Small and Lkcm International.
Diversification Opportunities for Lkcm Small and Lkcm International
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lkcm and Lkcm is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Lkcm Small Cap and Lkcm International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lkcm International 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 Lkcm International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lkcm International Equity has no effect on the direction of Lkcm Small i.e., Lkcm Small and Lkcm International go up and down completely randomly.
Pair Corralation between Lkcm Small and Lkcm International
Assuming the 90 days horizon Lkcm Small Cap is expected to generate 1.36 times more return on investment than Lkcm International. However, Lkcm Small is 1.36 times more volatile than Lkcm International Equity. It trades about 0.03 of its potential returns per unit of risk. Lkcm International Equity is currently generating about 0.04 per unit of risk. If you would invest 1,837 in Lkcm Small Cap on November 2, 2024 and sell it today you would earn a total of 312.00 from holding Lkcm Small Cap or generate 16.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Lkcm Small Cap vs. Lkcm International Equity
Performance |
| Timeline |
| Lkcm Small Cap |
| Lkcm International Equity |
Lkcm Small and Lkcm International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lkcm Small and Lkcm International
The main advantage of trading using opposite Lkcm Small and Lkcm International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lkcm Small position performs unexpectedly, Lkcm International 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 International will offset losses from the drop in Lkcm International's long position.The idea behind Lkcm Small Cap and Lkcm International Equity pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Lkcm International vs. Fvkvwx | Lkcm International vs. Rbb Fund | Lkcm International vs. Arrow Managed Futures | Lkcm International vs. Ftufox |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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