Correlation Between Lkcm Small and Virtus Convertible
Can any of the company-specific risk be diversified away by investing in both Lkcm Small and Virtus Convertible 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 Virtus Convertible 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 Virtus Convertible, you can compare the effects of market volatilities on Lkcm Small and Virtus Convertible 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 Virtus Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lkcm Small and Virtus Convertible.
Diversification Opportunities for Lkcm Small and Virtus Convertible
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lkcm and Virtus is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Lkcm Small Cap and Virtus Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Convertible 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 Virtus Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Convertible has no effect on the direction of Lkcm Small i.e., Lkcm Small and Virtus Convertible go up and down completely randomly.
Pair Corralation between Lkcm Small and Virtus Convertible
Assuming the 90 days horizon Lkcm Small Cap is expected to generate 2.48 times more return on investment than Virtus Convertible. However, Lkcm Small is 2.48 times more volatile than Virtus Convertible. It trades about 0.37 of its potential returns per unit of risk. Virtus Convertible is currently generating about 0.67 per unit of risk. If you would invest 2,136 in Lkcm Small Cap on September 4, 2024 and sell it today you would earn a total of 258.00 from holding Lkcm Small Cap or generate 12.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Lkcm Small Cap vs. Virtus Convertible
Performance |
| Timeline |
| Lkcm Small Cap |
| Virtus Convertible |
Lkcm Small and Virtus Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lkcm Small and Virtus Convertible
The main advantage of trading using opposite Lkcm Small and Virtus Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lkcm Small position performs unexpectedly, Virtus Convertible 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 Virtus Convertible will offset losses from the drop in Virtus Convertible's long position.| Lkcm Small vs. Siit High Yield | Lkcm Small vs. Gmo High Yield | Lkcm Small vs. Vanguard Star Fund | Lkcm Small vs. Morningstar Aggressive Growth |
| Virtus Convertible vs. Gmo High Yield | Virtus Convertible vs. Pace High Yield | Virtus Convertible vs. Calvert High Yield | Virtus Convertible vs. Pgim High Yield |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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