Correlation Between American Funds and Lkcm Small
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and Lkcm Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds 2040 and Lkcm Small Cap, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of Lkcm Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Lkcm Small.
Diversification Opportunities for American Funds and Lkcm Small
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and LKCM is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding American Funds 2040 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 American Funds 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 American Funds 2040 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 American Funds i.e., American Funds and Lkcm Small go up and down completely randomly.
Pair Corralation between American Funds and Lkcm Small
Assuming the 90 days horizon American Funds 2040 is expected to generate 0.56 times more return on investment than Lkcm Small. However, American Funds 2040 is 1.78 times less risky than Lkcm Small. It trades about 0.07 of its potential returns per unit of risk. Lkcm Small Cap is currently generating about 0.03 per unit of risk. If you would invest 1,646 in American Funds 2040 on October 24, 2024 and sell it today you would earn a total of 399.00 from holding American Funds 2040 or generate 24.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds 2040 vs. Lkcm Small Cap
Performance |
| Timeline |
| American Funds 2040 |
| Lkcm Small Cap |
American Funds and Lkcm Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Lkcm Small
The main advantage of trading using opposite American Funds and Lkcm Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. Glg Intl Small | American Funds vs. Small Pany Growth | American Funds vs. Sp Smallcap 600 | American Funds vs. Qs Defensive Growth |
| Lkcm Small vs. Lkcm Aquinas Catholic | Lkcm Small vs. Lkcm Equity Fund | Lkcm Small vs. Vanguard 500 Index | Lkcm Small vs. Barings Global Credit |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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