Correlation Between Lsv Small and Growth Income
Can any of the company-specific risk be diversified away by investing in both Lsv Small and Growth Income 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 Growth Income 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 Growth Income Fund, you can compare the effects of market volatilities on Lsv Small and Growth Income 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 Growth Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lsv Small and Growth Income.
Diversification Opportunities for Lsv Small and Growth Income
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lsv and Growth is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Lsv Small Cap and Growth Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Income 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 Growth Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Income has no effect on the direction of Lsv Small i.e., Lsv Small and Growth Income go up and down completely randomly.
Pair Corralation between Lsv Small and Growth Income
Assuming the 90 days horizon Lsv Small is expected to generate 4.97 times less return on investment than Growth Income. In addition to that, Lsv Small is 1.3 times more volatile than Growth Income Fund. It trades about 0.03 of its total potential returns per unit of risk. Growth Income Fund is currently generating about 0.19 per unit of volatility. If you would invest 2,342 in Growth Income Fund on October 20, 2024 and sell it today you would earn a total of 73.00 from holding Growth Income Fund or generate 3.12% 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. Growth Income Fund
Performance |
| Timeline |
| Lsv Small Cap |
| Growth Income |
Lsv Small and Growth Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lsv Small and Growth Income
The main advantage of trading using opposite Lsv Small and Growth Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lsv Small position performs unexpectedly, Growth Income 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 Growth Income will offset losses from the drop in Growth Income'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 |
| Growth Income vs. Victory Sophus Emerging | Growth Income vs. Target Retirement 2050 | Growth Income vs. Income Fund Income | Growth Income vs. Usaa Nasdaq 100 |
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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