Correlation Between Pace Small/medium and Lkcm Small-mid
Can any of the company-specific risk be diversified away by investing in both Pace Small/medium and Lkcm Small-mid 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 Pace Small/medium and Lkcm Small-mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pace Smallmedium Value and Lkcm Small Mid Cap, you can compare the effects of market volatilities on Pace Small/medium and Lkcm Small-mid 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 Pace Small/medium with a short position of Lkcm Small-mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace Small/medium and Lkcm Small-mid.
Diversification Opportunities for Pace Small/medium and Lkcm Small-mid
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pace and Lkcm is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Pace Smallmedium Value and Lkcm Small Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lkcm Small Mid and Pace Small/medium 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 Pace Smallmedium Value are associated (or correlated) with Lkcm Small-mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lkcm Small Mid has no effect on the direction of Pace Small/medium i.e., Pace Small/medium and Lkcm Small-mid go up and down completely randomly.
Pair Corralation between Pace Small/medium and Lkcm Small-mid
Assuming the 90 days horizon Pace Small/medium is expected to generate 1.65 times less return on investment than Lkcm Small-mid. In addition to that, Pace Small/medium is 1.08 times more volatile than Lkcm Small Mid Cap. It trades about 0.09 of its total potential returns per unit of risk. Lkcm Small Mid Cap is currently generating about 0.16 per unit of volatility. If you would invest 998.00 in Lkcm Small Mid Cap on September 1, 2024 and sell it today you would earn a total of 233.00 from holding Lkcm Small Mid Cap or generate 23.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Pace Smallmedium Value vs. Lkcm Small Mid Cap
Performance |
| Timeline |
| Pace Smallmedium Value |
| Lkcm Small Mid |
Pace Small/medium and Lkcm Small-mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace Small/medium and Lkcm Small-mid
The main advantage of trading using opposite Pace Small/medium and Lkcm Small-mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace Small/medium position performs unexpectedly, Lkcm Small-mid 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 Lkcm Small-mid will offset losses from the drop in Lkcm Small-mid's long position.| Pace Small/medium vs. T Rowe Price | Pace Small/medium vs. Oklahoma Municipal Fund | Pace Small/medium vs. California High Yield Municipal | Pace Small/medium vs. Gamco Global Telecommunications |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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