Correlation Between Lifestyle and Qs Defensive

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Can any of the company-specific risk be diversified away by investing in both Lifestyle and Qs Defensive 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 Lifestyle and Qs Defensive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifestyle Ii Growth and Qs Defensive Growth, you can compare the effects of market volatilities on Lifestyle and Qs Defensive 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 Lifestyle with a short position of Qs Defensive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifestyle and Qs Defensive.

Diversification Opportunities for Lifestyle and Qs Defensive

LifestyleLMLRXDiversified AwayLifestyleLMLRXDiversified Away100%
0.99
  Correlation Coefficient

No risk reduction

The 3 months correlation between Lifestyle and LMLRX is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Lifestyle Ii Growth and Qs Defensive Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qs Defensive Growth and Lifestyle 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 Lifestyle Ii Growth are associated (or correlated) with Qs Defensive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qs Defensive Growth has no effect on the direction of Lifestyle i.e., Lifestyle and Qs Defensive go up and down completely randomly.

Pair Corralation between Lifestyle and Qs Defensive

Assuming the 90 days horizon Lifestyle Ii Growth is expected to generate 1.53 times more return on investment than Qs Defensive. However, Lifestyle is 1.53 times more volatile than Qs Defensive Growth. It trades about 0.05 of its potential returns per unit of risk. Qs Defensive Growth is currently generating about 0.06 per unit of risk. If you would invest  1,277  in Lifestyle Ii Growth on October 25, 2024 and sell it today you would earn a total of  23.00  from holding Lifestyle Ii Growth or generate 1.8% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Lifestyle Ii Growth  vs.  Qs Defensive Growth

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -3-2-101
JavaScript chart by amCharts 3.21.15JLGSX LMLRX
       Timeline  
Lifestyle Ii Growth 

Risk-Adjusted Performance

0 of 100

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

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Qs Defensive Growth are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Qs Defensive is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan12.812.91313.113.2

Lifestyle and Qs Defensive Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.99-1.48-0.97-0.460.020.51.011.522.032.54 0.51.01.52.02.5
JavaScript chart by amCharts 3.21.15JLGSX LMLRX
       Returns  

Pair Trading with Lifestyle and Qs Defensive

The main advantage of trading using opposite Lifestyle and Qs Defensive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifestyle position performs unexpectedly, Qs Defensive 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 Qs Defensive will offset losses from the drop in Qs Defensive's long position.
The idea behind Lifestyle Ii Growth and Qs Defensive Growth 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 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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