Correlation Between Lebenthal Lisanti and Vanguard Small-cap

Can any of the company-specific risk be diversified away by investing in both Lebenthal Lisanti and Vanguard Small-cap 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 Lebenthal Lisanti and Vanguard Small-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lebenthal Lisanti Small and Vanguard Small Cap Index, you can compare the effects of market volatilities on Lebenthal Lisanti and Vanguard Small-cap 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 Lebenthal Lisanti with a short position of Vanguard Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lebenthal Lisanti and Vanguard Small-cap.

Diversification Opportunities for Lebenthal Lisanti and Vanguard Small-cap

0.89

Correlation Coefficient

Lebenthal Lisanti  Vanguard Small-cap

Very poor diversification

The 3 months correlation between Lebenthal and Vanguard is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Lebenthal Lisanti Small and Vanguard Small Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Small Cap and Lebenthal Lisanti 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 Lebenthal Lisanti Small are associated (or correlated) with Vanguard Small-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Small Cap has no effect on the direction of Lebenthal Lisanti i.e., Lebenthal Lisanti and Vanguard Small-cap go up and down completely randomly.

Pair Corralation between Lebenthal Lisanti and Vanguard Small-cap

Assuming the 90 days horizon Lebenthal Lisanti Small is expected to generate 1.21 times more return on investment than Vanguard Small-cap. However, Lebenthal Lisanti is 1.21 times more volatile than Vanguard Small Cap Index. It trades about 0.05 of its potential returns per unit of risk. Vanguard Small Cap Index is currently generating about 0.05 per unit of risk. If you would invest  1,655  in Lebenthal Lisanti Small on October 11, 2024 and sell it today you would earn a total of  536.00  from holding Lebenthal Lisanti Small or generate 32.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Lebenthal Lisanti Small  vs.  Vanguard Small Cap Index

Lebenthal Lisanti Small

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lebenthal Lisanti Small are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Lebenthal Lisanti is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard Small Cap

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Small Cap Index are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Vanguard Small-cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lebenthal Lisanti and Vanguard Small-cap

The main advantage of trading using opposite Lebenthal Lisanti and Vanguard Small-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lebenthal Lisanti position performs unexpectedly, Vanguard Small-cap 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 Vanguard Small-cap will offset losses from the drop in Vanguard Small-cap's long position.

The idea behind Lebenthal Lisanti Small and Vanguard Small Cap Index pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.