Correlation Between Thompson Bond and Lkcm Small
Can any of the company-specific risk be diversified away by investing in both Thompson Bond 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 Thompson Bond and Lkcm Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thompson Bond Fund and Lkcm Small Cap, you can compare the effects of market volatilities on Thompson Bond 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 Thompson Bond with a short position of Lkcm Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thompson Bond and Lkcm Small.
Diversification Opportunities for Thompson Bond and Lkcm Small
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Thompson and Lkcm is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Thompson Bond 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 Thompson Bond 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 Thompson Bond 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 Thompson Bond i.e., Thompson Bond and Lkcm Small go up and down completely randomly.
Pair Corralation between Thompson Bond and Lkcm Small
Assuming the 90 days horizon Thompson Bond is expected to generate 10.74 times less return on investment than Lkcm Small. But when comparing it to its historical volatility, Thompson Bond Fund is 11.56 times less risky than Lkcm Small. It trades about 0.23 of its potential returns per unit of risk. Lkcm Small Cap is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,135 in Lkcm Small Cap on August 30, 2024 and sell it today you would earn a total of 249.00 from holding Lkcm Small Cap or generate 11.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thompson Bond Fund vs. Lkcm Small Cap
Performance |
| Timeline |
| Thompson Bond |
| Lkcm Small Cap |
Thompson Bond and Lkcm Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thompson Bond and Lkcm Small
The main advantage of trading using opposite Thompson Bond and Lkcm Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thompson Bond 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.| Thompson Bond vs. Tcw Total Return | Thompson Bond vs. Amg Yacktman Focused | Thompson Bond vs. Fidelity Advisor Floating | Thompson Bond vs. Doubleline Total Return |
| Lkcm Small vs. Putnam Equity Income | Lkcm Small vs. Putnam Growth Opportunities | Lkcm Small vs. HUMANA INC | Lkcm Small vs. Aquagold International |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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