Correlation Between Lkcm Small and Touchstone Small
Can any of the company-specific risk be diversified away by investing in both Lkcm Small and Touchstone Small 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 Touchstone Small 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 Touchstone Small Cap, you can compare the effects of market volatilities on Lkcm Small and Touchstone Small 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 Touchstone Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lkcm Small and Touchstone Small.
Diversification Opportunities for Lkcm Small and Touchstone Small
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lkcm and Touchstone is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Lkcm Small Cap and Touchstone Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Small Cap 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 Touchstone Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Small Cap has no effect on the direction of Lkcm Small i.e., Lkcm Small and Touchstone Small go up and down completely randomly.
Pair Corralation between Lkcm Small and Touchstone Small
Assuming the 90 days horizon Lkcm Small Cap is expected to under-perform the Touchstone Small. In addition to that, Lkcm Small is 1.57 times more volatile than Touchstone Small Cap. It trades about -0.16 of its total potential returns per unit of risk. Touchstone Small Cap is currently generating about -0.11 per unit of volatility. If you would invest 4,132 in Touchstone Small Cap on November 3, 2024 and sell it today you would lose (186.00) from holding Touchstone Small Cap or give up 4.5% 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. Touchstone Small Cap
Performance |
| Timeline |
| Lkcm Small Cap |
| Touchstone Small Cap |
Lkcm Small and Touchstone Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lkcm Small and Touchstone Small
The main advantage of trading using opposite Lkcm Small and Touchstone Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lkcm Small position performs unexpectedly, Touchstone Small 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 Touchstone Small will offset losses from the drop in Touchstone Small'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 |
| Touchstone Small vs. Tiaa Cref Lifecycle Retirement | Touchstone Small vs. Putnman Retirement Ready | Touchstone Small vs. Tiaa Cref Lifestyle Moderate | Touchstone Small vs. Dimensional Retirement Income |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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