Correlation Between Lkcm Small and Mfs Georgia
Can any of the company-specific risk be diversified away by investing in both Lkcm Small and Mfs Georgia 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 Mfs Georgia 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 Mfs Georgia Municipal, you can compare the effects of market volatilities on Lkcm Small and Mfs Georgia 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 Mfs Georgia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lkcm Small and Mfs Georgia.
Diversification Opportunities for Lkcm Small and Mfs Georgia
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lkcm and Mfs is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Lkcm Small Cap and Mfs Georgia Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Georgia Municipal 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 Mfs Georgia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Georgia Municipal has no effect on the direction of Lkcm Small i.e., Lkcm Small and Mfs Georgia go up and down completely randomly.
Pair Corralation between Lkcm Small and Mfs Georgia
Assuming the 90 days horizon Lkcm Small Cap is expected to generate 3.12 times more return on investment than Mfs Georgia. However, Lkcm Small is 3.12 times more volatile than Mfs Georgia Municipal. It trades about 0.12 of its potential returns per unit of risk. Mfs Georgia Municipal is currently generating about -0.05 per unit of risk. If you would invest 2,095 in Lkcm Small Cap on November 3, 2024 and sell it today you would earn a total of 48.00 from holding Lkcm Small Cap or generate 2.29% 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. Mfs Georgia Municipal
Performance |
| Timeline |
| Lkcm Small Cap |
| Mfs Georgia Municipal |
Lkcm Small and Mfs Georgia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lkcm Small and Mfs Georgia
The main advantage of trading using opposite Lkcm Small and Mfs Georgia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lkcm Small position performs unexpectedly, Mfs Georgia 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 Mfs Georgia will offset losses from the drop in Mfs Georgia'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 |
| Mfs Georgia vs. Voya Target Retirement | Mfs Georgia vs. Franklin Lifesmart Retirement | Mfs Georgia vs. Wilmington Trust Retirement | Mfs Georgia vs. Blackrock Moderate Prepared |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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