Correlation Between Us Global and Lkcm Small
Can any of the company-specific risk be diversified away by investing in both Us Global 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 Us Global and Lkcm Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Us Global Leaders and Lkcm Small Cap, you can compare the effects of market volatilities on Us Global 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 Us Global with a short position of Lkcm Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Global and Lkcm Small.
Diversification Opportunities for Us Global and Lkcm Small
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between USGLX and Lkcm is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Us Global Leaders 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 Us Global 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 Us Global Leaders 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 Us Global i.e., Us Global and Lkcm Small go up and down completely randomly.
Pair Corralation between Us Global and Lkcm Small
Assuming the 90 days horizon Us Global Leaders is expected to generate 0.91 times more return on investment than Lkcm Small. However, Us Global Leaders is 1.1 times less risky than Lkcm Small. It trades about 0.25 of its potential returns per unit of risk. Lkcm Small Cap is currently generating about 0.12 per unit of risk. If you would invest 6,361 in Us Global Leaders on November 3, 2024 and sell it today you would earn a total of 275.00 from holding Us Global Leaders or generate 4.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Us Global Leaders vs. Lkcm Small Cap
Performance |
| Timeline |
| Us Global Leaders |
| Lkcm Small Cap |
Us Global and Lkcm Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Us Global and Lkcm Small
The main advantage of trading using opposite Us Global and Lkcm Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Global 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.| Us Global vs. Icon Information Technology | Us Global vs. Columbia Global Technology | Us Global vs. Hennessy Technology Fund | Us Global vs. Pgim Jennison Technology |
| Lkcm Small vs. Fulcrum Diversified Absolute | Lkcm Small vs. Jhancock Diversified Macro | Lkcm Small vs. Stone Ridge Diversified | Lkcm Small vs. Wilmington Diversified 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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