Correlation Between Balanced Fund and Lsv Emerging
Can any of the company-specific risk be diversified away by investing in both Balanced Fund and Lsv Emerging 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 Balanced Fund and Lsv Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balanced Fund Investor and Lsv Emerging Markets, you can compare the effects of market volatilities on Balanced Fund and Lsv Emerging 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 Balanced Fund with a short position of Lsv Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Fund and Lsv Emerging.
Diversification Opportunities for Balanced Fund and Lsv Emerging
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Balanced and Lsv is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Investor and Lsv Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lsv Emerging Markets and Balanced Fund 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 Balanced Fund Investor are associated (or correlated) with Lsv Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lsv Emerging Markets has no effect on the direction of Balanced Fund i.e., Balanced Fund and Lsv Emerging go up and down completely randomly.
Pair Corralation between Balanced Fund and Lsv Emerging
Assuming the 90 days horizon Balanced Fund Investor is expected to generate 0.51 times more return on investment than Lsv Emerging. However, Balanced Fund Investor is 1.95 times less risky than Lsv Emerging. It trades about 0.12 of its potential returns per unit of risk. Lsv Emerging Markets is currently generating about 0.05 per unit of risk. If you would invest 1,971 in Balanced Fund Investor on September 12, 2024 and sell it today you would earn a total of 67.00 from holding Balanced Fund Investor or generate 3.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Balanced Fund Investor vs. Lsv Emerging Markets
Performance |
| Timeline |
| Balanced Fund Investor |
| Lsv Emerging Markets |
Balanced Fund and Lsv Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balanced Fund and Lsv Emerging
The main advantage of trading using opposite Balanced Fund and Lsv Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Fund position performs unexpectedly, Lsv Emerging 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 Lsv Emerging will offset losses from the drop in Lsv Emerging's long position.| Balanced Fund vs. Select Fund Investor | Balanced Fund vs. Heritage Fund Investor | Balanced Fund vs. Value Fund Investor | Balanced Fund vs. Growth Fund Investor |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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