Correlation Between Lkcm Small and Bny Mellon
Can any of the company-specific risk be diversified away by investing in both Lkcm Small and Bny Mellon 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 Bny Mellon 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 Bny Mellon Asset, you can compare the effects of market volatilities on Lkcm Small and Bny Mellon 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 Bny Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lkcm Small and Bny Mellon.
Diversification Opportunities for Lkcm Small and Bny Mellon
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between LKCM and Bny is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Lkcm Small Cap and Bny Mellon Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bny Mellon Asset 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 Bny Mellon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bny Mellon Asset has no effect on the direction of Lkcm Small i.e., Lkcm Small and Bny Mellon go up and down completely randomly.
Pair Corralation between Lkcm Small and Bny Mellon
Assuming the 90 days horizon Lkcm Small Cap is expected to under-perform the Bny Mellon. In addition to that, Lkcm Small is 2.23 times more volatile than Bny Mellon Asset. It trades about -0.14 of its total potential returns per unit of risk. Bny Mellon Asset is currently generating about -0.09 per unit of volatility. If you would invest 1,394 in Bny Mellon Asset on October 23, 2024 and sell it today you would lose (22.00) from holding Bny Mellon Asset or give up 1.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lkcm Small Cap vs. Bny Mellon Asset
Performance |
| Timeline |
| Lkcm Small Cap |
| Bny Mellon Asset |
Lkcm Small and Bny Mellon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lkcm Small and Bny Mellon
The main advantage of trading using opposite Lkcm Small and Bny Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lkcm Small position performs unexpectedly, Bny Mellon 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 Bny Mellon will offset losses from the drop in Bny Mellon's long position.| Lkcm Small vs. The Gold Bullion | Lkcm Small vs. Sprott Gold Equity | Lkcm Small vs. Vy Goldman Sachs | Lkcm Small vs. Goldman Sachs Multi Manager |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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