Correlation Between Lsv Small and American Funds
Can any of the company-specific risk be diversified away by investing in both Lsv Small and American Funds 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 Small and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lsv Small Cap and American Funds 2010, you can compare the effects of market volatilities on Lsv Small and American Funds 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 Small with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lsv Small and American Funds.
Diversification Opportunities for Lsv Small and American Funds
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lsv and American is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Lsv Small Cap and American Funds 2010 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2010 and Lsv 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 Lsv Small Cap are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds 2010 has no effect on the direction of Lsv Small i.e., Lsv Small and American Funds go up and down completely randomly.
Pair Corralation between Lsv Small and American Funds
Assuming the 90 days horizon Lsv Small Cap is expected to generate 1.52 times more return on investment than American Funds. However, Lsv Small is 1.52 times more volatile than American Funds 2010. It trades about 0.23 of its potential returns per unit of risk. American Funds 2010 is currently generating about -0.04 per unit of risk. If you would invest 1,855 in Lsv Small Cap on October 24, 2024 and sell it today you would earn a total of 69.00 from holding Lsv Small Cap or generate 3.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Lsv Small Cap vs. American Funds 2010
Performance |
| Timeline |
| Lsv Small Cap |
| American Funds 2010 |
Lsv Small and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lsv Small and American Funds
The main advantage of trading using opposite Lsv Small and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lsv Small position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Lsv Small vs. Amg Timessquare Mid | Lsv Small vs. Lsv Value Equity | Lsv Small vs. Baron Discovery Fund | Lsv Small vs. Victory Sycamore Established |
| American Funds vs. Heartland Value Plus | American Funds vs. Lsv Small Cap | American Funds vs. Valic Company I | American Funds vs. Small Cap Growth Profund |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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