Correlation Between Lsv Small and Investment Grade
Can any of the company-specific risk be diversified away by investing in both Lsv Small and Investment Grade 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 Investment Grade 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 Investment Grade Porate, you can compare the effects of market volatilities on Lsv Small and Investment Grade 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 Investment Grade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lsv Small and Investment Grade.
Diversification Opportunities for Lsv Small and Investment Grade
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lsv and Investment is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Lsv Small Cap and Investment Grade Porate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment Grade Porate 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 Investment Grade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment Grade Porate has no effect on the direction of Lsv Small i.e., Lsv Small and Investment Grade go up and down completely randomly.
Pair Corralation between Lsv Small and Investment Grade
Assuming the 90 days horizon Lsv Small Cap is expected to generate 2.59 times more return on investment than Investment Grade. However, Lsv Small is 2.59 times more volatile than Investment Grade Porate. It trades about 0.15 of its potential returns per unit of risk. Investment Grade Porate is currently generating about 0.23 per unit of risk. If you would invest 1,849 in Lsv Small Cap on November 9, 2024 and sell it today you would earn a total of 52.00 from holding Lsv Small Cap or generate 2.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lsv Small Cap vs. Investment Grade Porate
Performance |
| Timeline |
| Lsv Small Cap |
| Investment Grade Porate |
Lsv Small and Investment Grade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lsv Small and Investment Grade
The main advantage of trading using opposite Lsv Small and Investment Grade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lsv Small position performs unexpectedly, Investment Grade 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 Investment Grade will offset losses from the drop in Investment Grade's 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 |
| Investment Grade vs. Franklin Lifesmart Retirement | Investment Grade vs. Lifestyle Ii Moderate | Investment Grade vs. Columbia Moderate Growth | Investment Grade vs. Calvert Moderate Allocation |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |