Correlation Between Lkcm Small and Smallcap Fund
Can any of the company-specific risk be diversified away by investing in both Lkcm Small and Smallcap Fund 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 Smallcap Fund 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 Smallcap Fund Fka, you can compare the effects of market volatilities on Lkcm Small and Smallcap Fund 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 Smallcap Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lkcm Small and Smallcap Fund.
Diversification Opportunities for Lkcm Small and Smallcap Fund
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lkcm and Smallcap is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Lkcm Small Cap and Smallcap Fund Fka in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smallcap Fund Fka 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 Smallcap Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smallcap Fund Fka has no effect on the direction of Lkcm Small i.e., Lkcm Small and Smallcap Fund go up and down completely randomly.
Pair Corralation between Lkcm Small and Smallcap Fund
Assuming the 90 days horizon Lkcm Small Cap is expected to under-perform the Smallcap Fund. In addition to that, Lkcm Small is 1.28 times more volatile than Smallcap Fund Fka. It trades about -0.16 of its total potential returns per unit of risk. Smallcap Fund Fka is currently generating about -0.1 per unit of volatility. If you would invest 2,793 in Smallcap Fund Fka on November 3, 2024 and sell it today you would lose (145.00) from holding Smallcap Fund Fka or give up 5.19% 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. Smallcap Fund Fka
Performance |
| Timeline |
| Lkcm Small Cap |
| Smallcap Fund Fka |
Lkcm Small and Smallcap Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lkcm Small and Smallcap Fund
The main advantage of trading using opposite Lkcm Small and Smallcap Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lkcm Small position performs unexpectedly, Smallcap Fund 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 Smallcap Fund will offset losses from the drop in Smallcap Fund'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 |
| Smallcap Fund vs. Specialized Technology Fund | Smallcap Fund vs. Icon Information Technology | Smallcap Fund vs. Hennessy Technology Fund | Smallcap Fund vs. Columbia Global Technology |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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