Correlation Between Ultra-short Fixed and Lkcm Small-mid
Can any of the company-specific risk be diversified away by investing in both Ultra-short Fixed 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 Ultra-short Fixed 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 Ultra Short Fixed Income and Lkcm Small Mid Cap, you can compare the effects of market volatilities on Ultra-short Fixed 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 Ultra-short Fixed with a short position of Lkcm Small-mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra-short Fixed and Lkcm Small-mid.
Diversification Opportunities for Ultra-short Fixed and Lkcm Small-mid
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ultra-short and Lkcm is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Short Fixed Income 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 Ultra-short Fixed 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 Ultra Short Fixed Income 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 Ultra-short Fixed i.e., Ultra-short Fixed and Lkcm Small-mid go up and down completely randomly.
Pair Corralation between Ultra-short Fixed and Lkcm Small-mid
Assuming the 90 days horizon Ultra-short Fixed is expected to generate 3.25 times less return on investment than Lkcm Small-mid. But when comparing it to its historical volatility, Ultra Short Fixed Income is 12.53 times less risky than Lkcm Small-mid. It trades about 0.24 of its potential returns per unit of risk. Lkcm Small Mid Cap is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 888.00 in Lkcm Small Mid Cap on September 3, 2024 and sell it today you would earn a total of 343.00 from holding Lkcm Small Mid Cap or generate 38.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ultra Short Fixed Income vs. Lkcm Small Mid Cap
Performance |
| Timeline |
| Ultra Short Fixed |
| Lkcm Small Mid |
Ultra-short Fixed and Lkcm Small-mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultra-short Fixed and Lkcm Small-mid
The main advantage of trading using opposite Ultra-short Fixed and Lkcm Small-mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra-short Fixed 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.| Ultra-short Fixed vs. Ab Global Bond | Ultra-short Fixed vs. Siit Global Managed | Ultra-short Fixed vs. Nationwide Global Equity | Ultra-short Fixed vs. Franklin Mutual Global |
| Lkcm Small-mid vs. Lkcm Aquinas Catholic | Lkcm Small-mid vs. Lkcm Balanced Fund | Lkcm Small-mid vs. Lkcm Equity Fund | Lkcm Small-mid vs. Lkcm Fixed Income |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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