Correlation Between Smallcap Growth and Lebenthal Lisanti
Can any of the company-specific risk be diversified away by investing in both Smallcap Growth and Lebenthal Lisanti 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 Smallcap Growth and Lebenthal Lisanti into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smallcap Growth Fund and Lebenthal Lisanti Small, you can compare the effects of market volatilities on Smallcap Growth and Lebenthal Lisanti 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 Smallcap Growth with a short position of Lebenthal Lisanti. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Growth and Lebenthal Lisanti.
Diversification Opportunities for Smallcap Growth and Lebenthal Lisanti
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Smallcap and Lebenthal is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Growth Fund and Lebenthal Lisanti Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lebenthal Lisanti Small and Smallcap Growth 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 Smallcap Growth Fund are associated (or correlated) with Lebenthal Lisanti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lebenthal Lisanti Small has no effect on the direction of Smallcap Growth i.e., Smallcap Growth and Lebenthal Lisanti go up and down completely randomly.
Pair Corralation between Smallcap Growth and Lebenthal Lisanti
Assuming the 90 days horizon Smallcap Growth is expected to generate 1.18 times less return on investment than Lebenthal Lisanti. But when comparing it to its historical volatility, Smallcap Growth Fund is 1.12 times less risky than Lebenthal Lisanti. It trades about 0.05 of its potential returns per unit of risk. Lebenthal Lisanti Small is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,589 in Lebenthal Lisanti Small on September 19, 2024 and sell it today you would earn a total of 618.00 from holding Lebenthal Lisanti Small or generate 38.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Smallcap Growth Fund vs. Lebenthal Lisanti Small
Performance |
| Timeline |
| Smallcap Growth |
| Lebenthal Lisanti Small |
Smallcap Growth and Lebenthal Lisanti Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap Growth and Lebenthal Lisanti
The main advantage of trading using opposite Smallcap Growth and Lebenthal Lisanti positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap Growth position performs unexpectedly, Lebenthal Lisanti 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 Lebenthal Lisanti will offset losses from the drop in Lebenthal Lisanti's long position.| Smallcap Growth vs. Strategic Asset Management | Smallcap Growth vs. Strategic Asset Management | Smallcap Growth vs. Strategic Asset Management | Smallcap Growth vs. Strategic Asset Management |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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