Correlation Between Lsv Small and Mainstay Large
Can any of the company-specific risk be diversified away by investing in both Lsv Small and Mainstay Large 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 Mainstay Large 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 Mainstay Large Cap, you can compare the effects of market volatilities on Lsv Small and Mainstay Large 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 Mainstay Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lsv Small and Mainstay Large.
Diversification Opportunities for Lsv Small and Mainstay Large
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lsv and Mainstay is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Lsv Small Cap and Mainstay Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Large Cap 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 Mainstay Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Large Cap has no effect on the direction of Lsv Small i.e., Lsv Small and Mainstay Large go up and down completely randomly.
Pair Corralation between Lsv Small and Mainstay Large
Assuming the 90 days horizon Lsv Small Cap is expected to generate 0.67 times more return on investment than Mainstay Large. However, Lsv Small Cap is 1.48 times less risky than Mainstay Large. It trades about 0.05 of its potential returns per unit of risk. Mainstay Large Cap is currently generating about 0.01 per unit of risk. If you would invest 1,732 in Lsv Small Cap on September 12, 2024 and sell it today you would earn a total of 308.00 from holding Lsv Small Cap or generate 17.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
Lsv Small Cap vs. Mainstay Large Cap
Performance |
| Timeline |
| Lsv Small Cap |
| Mainstay Large Cap |
Lsv Small and Mainstay Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lsv Small and Mainstay Large
The main advantage of trading using opposite Lsv Small and Mainstay Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lsv Small position performs unexpectedly, Mainstay Large 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 Mainstay Large will offset losses from the drop in Mainstay Large's long position.| Lsv Small vs. Vanguard Small Cap Value | Lsv Small vs. Vanguard Small Cap Value | Lsv Small vs. Us Small Cap | Lsv Small vs. Us Targeted Value |
| Mainstay Large vs. Palm Valley Capital | Mainstay Large vs. Lsv Small Cap | Mainstay Large vs. Queens Road Small | Mainstay Large vs. Victory Rs Partners |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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