Correlation Between Bruce Fund and Lkcm Equity

Can any of the company-specific risk be diversified away by investing in both Bruce Fund and Lkcm Equity 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 Bruce Fund and Lkcm Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bruce Fund Bruce and Lkcm Equity Fund, you can compare the effects of market volatilities on Bruce Fund and Lkcm Equity 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 Bruce Fund with a short position of Lkcm Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bruce Fund and Lkcm Equity.

Diversification Opportunities for Bruce Fund and Lkcm Equity

-0.46

Correlation Coefficient

Bruce Fund  Lkcm Equity

Very good diversification

The 3 months correlation between Bruce and Lkcm is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Bruce Fund Bruce and Lkcm Equity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lkcm Equity Fund and Bruce 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 Bruce Fund Bruce are associated (or correlated) with Lkcm Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lkcm Equity Fund has no effect on the direction of Bruce Fund i.e., Bruce Fund and Lkcm Equity go up and down completely randomly.

Pair Corralation between Bruce Fund and Lkcm Equity

Assuming the 90 days horizon Bruce Fund Bruce is expected to generate 0.7 times more return on investment than Lkcm Equity. However, Bruce Fund Bruce is 1.42 times less risky than Lkcm Equity. It trades about 0.08 of its potential returns per unit of risk. Lkcm Equity Fund is currently generating about -0.05 per unit of risk. If you would invest  49,854  in Bruce Fund Bruce on December 28, 2024 and sell it today you would earn a total of  1,490  from holding Bruce Fund Bruce or generate 2.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Bruce Fund Bruce  vs.  Lkcm Equity Fund

Bruce Fund Bruce

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bruce Fund Bruce are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Bruce Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lkcm Equity Fund

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lkcm Equity Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Lkcm Equity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bruce Fund and Lkcm Equity

The main advantage of trading using opposite Bruce Fund and Lkcm Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bruce Fund position performs unexpectedly, Lkcm Equity 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 Equity will offset losses from the drop in Lkcm Equity's long position.

The idea behind Bruce Fund Bruce and Lkcm Equity Fund 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.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.