Correlation Between Kensington Managed and Lsv Global

Can any of the company-specific risk be diversified away by investing in both Kensington Managed and Lsv Global 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 Kensington Managed and Lsv Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kensington Managed Income and Lsv Global Value, you can compare the effects of market volatilities on Kensington Managed and Lsv Global 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 Kensington Managed with a short position of Lsv Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kensington Managed and Lsv Global.

Diversification Opportunities for Kensington Managed and Lsv Global

0.86

Correlation Coefficient

Kensington Managed  Lsv Global

Very poor diversification

The 3 months correlation between Kensington and Lsv is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Kensington Managed Income and Lsv Global Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lsv Global Value and Kensington Managed 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 Kensington Managed Income are associated (or correlated) with Lsv Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lsv Global Value has no effect on the direction of Kensington Managed i.e., Kensington Managed and Lsv Global go up and down completely randomly.

Pair Corralation between Kensington Managed and Lsv Global

Assuming the 90 days horizon Kensington Managed is expected to generate 3.08 times less return on investment than Lsv Global. But when comparing it to its historical volatility, Kensington Managed Income is 2.83 times less risky than Lsv Global. It trades about 0.05 of its potential returns per unit of risk. Lsv Global Value is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,410  in Lsv Global Value on December 30, 2024 and sell it today you would earn a total of  39.00  from holding Lsv Global Value or generate 2.77% return on investment over 90 days.

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

Kensington Managed Income  vs.  Lsv Global Value

Kensington Managed Income

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kensington Managed Income are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Kensington Managed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lsv Global Value

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lsv Global Value are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Lsv Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kensington Managed and Lsv Global

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

The idea behind Kensington Managed Income and Lsv Global Value 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.