Correlation Between Lsv Small and Emerging Growth
Can any of the company-specific risk be diversified away by investing in both Lsv Small and Emerging Growth 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 Emerging Growth 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 Emerging Growth Fund, you can compare the effects of market volatilities on Lsv Small and Emerging Growth 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 Emerging Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lsv Small and Emerging Growth.
Diversification Opportunities for Lsv Small and Emerging Growth
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lsv and EMERGING is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Lsv Small Cap and Emerging Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Growth 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 Emerging Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Growth has no effect on the direction of Lsv Small i.e., Lsv Small and Emerging Growth go up and down completely randomly.
Pair Corralation between Lsv Small and Emerging Growth
Assuming the 90 days horizon Lsv Small is expected to generate 1.35 times less return on investment than Emerging Growth. But when comparing it to its historical volatility, Lsv Small Cap is 1.61 times less risky than Emerging Growth. It trades about 0.15 of its potential returns per unit of risk. Emerging Growth Fund is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,226 in Emerging Growth Fund on November 3, 2024 and sell it today you would earn a total of 42.00 from holding Emerging Growth Fund or generate 3.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lsv Small Cap vs. Emerging Growth Fund
Performance |
| Timeline |
| Lsv Small Cap |
| Emerging Growth |
Lsv Small and Emerging Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lsv Small and Emerging Growth
The main advantage of trading using opposite Lsv Small and Emerging Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lsv Small position performs unexpectedly, Emerging Growth 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 Emerging Growth will offset losses from the drop in Emerging Growth'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 |
| Emerging Growth vs. Barings Global Floating | Emerging Growth vs. Rbc Global Equity | Emerging Growth vs. Qs Moderate Growth | Emerging Growth vs. Tfa Alphagen Growth |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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