Correlation Between Lsv Global and Small Cap
Can any of the company-specific risk be diversified away by investing in both Lsv Global and Small Cap 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 Lsv Global and Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lsv Global Value and Small Cap Stock, you can compare the effects of market volatilities on Lsv Global and Small Cap 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 Lsv Global with a short position of Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lsv Global and Small Cap.
Diversification Opportunities for Lsv Global and Small Cap
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lsv and Small is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Lsv Global Value and Small Cap Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Stock and Lsv Global 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 Lsv Global Value are associated (or correlated) with Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Stock has no effect on the direction of Lsv Global i.e., Lsv Global and Small Cap go up and down completely randomly.
Pair Corralation between Lsv Global and Small Cap
Assuming the 90 days horizon Lsv Global Value is expected to generate 0.63 times more return on investment than Small Cap. However, Lsv Global Value is 1.59 times less risky than Small Cap. It trades about 0.07 of its potential returns per unit of risk. Small Cap Stock is currently generating about 0.04 per unit of risk. If you would invest 1,181 in Lsv Global Value on September 2, 2024 and sell it today you would earn a total of 377.00 from holding Lsv Global Value or generate 31.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lsv Global Value vs. Small Cap Stock
Performance |
| Timeline |
| Lsv Global Value |
| Small Cap Stock |
Lsv Global and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lsv Global and Small Cap
The main advantage of trading using opposite Lsv Global and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lsv Global position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| Lsv Global vs. Lsv Value Equity | Lsv Global vs. Lsv Small Cap | Lsv Global vs. Lsv Emerging Markets | Lsv Global vs. Lsv Value Equity |
| Small Cap vs. Calamos Global Equity | Small Cap vs. Cutler Equity | Small Cap vs. Us Vector Equity | Small Cap vs. Small Cap Equity |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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