Correlation Between Voya Intermediate and Lkcm Small-mid

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

By analyzing existing cross correlation between Voya Intermediate Bond and Lkcm Small Mid Cap, you can compare the effects of market volatilities on Voya Intermediate and Lkcm Small-mid 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 Voya Intermediate with a short position of Lkcm Small-mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Intermediate and Lkcm Small-mid.

Diversification Opportunities for Voya Intermediate and Lkcm Small-mid

-0.7

Correlation Coefficient

Voya Intermediate  Lkcm Small-mid

Excellent diversification

The 3 months correlation between Voya and Lkcm is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Voya Intermediate Bond and Lkcm Small Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lkcm Small Mid and Voya Intermediate 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 Voya Intermediate Bond are associated (or correlated) with Lkcm Small-mid. 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 Mid has no effect on the direction of Voya Intermediate i.e., Voya Intermediate and Lkcm Small-mid go up and down completely randomly.

Pair Corralation between Voya Intermediate and Lkcm Small-mid

Assuming the 90 days horizon Voya Intermediate Bond is expected to under-perform the Lkcm Small-mid. But the mutual fund apears to be less risky and, when comparing its historical volatility, Voya Intermediate Bond is 2.95 times less risky than Lkcm Small-mid. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Lkcm Small Mid Cap is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  1,039  in Lkcm Small Mid Cap on September 2, 2024 and sell it today you would earn a total of  192.00  from holding Lkcm Small Mid Cap or generate 18.48% return on investment over 90 days.

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

Voya Intermediate Bond  vs.  Lkcm Small Mid Cap

Voya Intermediate Bond

Risk-Adjusted Performance

0 of 100

Very Weak

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

Lkcm Small Mid

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lkcm Small Mid Cap are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Lkcm Small-mid showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Voya Intermediate and Lkcm Small-mid

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

The idea behind Voya Intermediate Bond and Lkcm Small Mid Cap 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..