Correlation Between F/m Investments and Lsv Emerging

Can any of the company-specific risk be diversified away by investing in both F/m Investments 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 F/m Investments and Lsv Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fm Investments Large and Lsv Emerging Markets, you can compare the effects of market volatilities on F/m Investments 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 F/m Investments with a short position of Lsv Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of F/m Investments and Lsv Emerging.

Diversification Opportunities for F/m Investments and Lsv Emerging

-0.53

Correlation Coefficient

F/m Investments  Lsv Emerging

Excellent diversification

The 3 months correlation between F/m and Lsv is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Fm Investments Large 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 F/m Investments 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 Fm Investments Large 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 F/m Investments i.e., F/m Investments and Lsv Emerging go up and down completely randomly.

Pair Corralation between F/m Investments and Lsv Emerging

Assuming the 90 days horizon Fm Investments Large is expected to under-perform the Lsv Emerging. In addition to that, F/m Investments is 2.19 times more volatile than Lsv Emerging Markets. It trades about -0.14 of its total potential returns per unit of risk. Lsv Emerging Markets is currently generating about 0.13 per unit of volatility. If you would invest  1,178  in Lsv Emerging Markets on December 25, 2024 and sell it today you would earn a total of  77.00  from holding Lsv Emerging Markets or generate 6.54% return on investment over 90 days.

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

Fm Investments Large  vs.  Lsv Emerging Markets

Fm Investments Large

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fm Investments Large has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's essential indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Lsv Emerging Markets

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lsv Emerging Markets are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Lsv Emerging may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with F/m Investments and Lsv Emerging

The main advantage of trading using opposite F/m Investments and Lsv Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if F/m Investments 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.

The idea behind Fm Investments Large and Lsv Emerging Markets 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.