Correlation Between Inflation Protection and Lkcm Small
Can any of the company-specific risk be diversified away by investing in both Inflation Protection and Lkcm Small 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 Inflation Protection and Lkcm Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inflation Protection Fund and Lkcm Small Cap, you can compare the effects of market volatilities on Inflation Protection and Lkcm Small 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 Inflation Protection with a short position of Lkcm Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inflation Protection and Lkcm Small.
Diversification Opportunities for Inflation Protection and Lkcm Small
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Inflation and Lkcm is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Inflation Protection Fund and Lkcm Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lkcm Small Cap and Inflation Protection 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 Inflation Protection Fund are associated (or correlated) with Lkcm Small. 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 Cap has no effect on the direction of Inflation Protection i.e., Inflation Protection and Lkcm Small go up and down completely randomly.
Pair Corralation between Inflation Protection and Lkcm Small
Assuming the 90 days horizon Inflation Protection is expected to generate 3.1 times less return on investment than Lkcm Small. But when comparing it to its historical volatility, Inflation Protection Fund is 4.33 times less risky than Lkcm Small. It trades about 0.05 of its potential returns per unit of risk. Lkcm Small Cap is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,952 in Lkcm Small Cap on November 3, 2024 and sell it today you would earn a total of 191.00 from holding Lkcm Small Cap or generate 9.78% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 99.6% |
Values | Daily Returns |
Inflation Protection Fund vs. Lkcm Small Cap
Performance |
Timeline |
Inflation Protection |
Lkcm Small Cap |
Inflation Protection and Lkcm Small Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Inflation Protection and Lkcm Small
The main advantage of trading using opposite Inflation Protection and Lkcm Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inflation Protection position performs unexpectedly, Lkcm Small 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 will offset losses from the drop in Lkcm Small's long position.Inflation Protection vs. Artisan High Income | Inflation Protection vs. Rbc Bluebay Emerging | Inflation Protection vs. Gmo Emerging Ntry | Inflation Protection vs. Morningstar Defensive Bond |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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