Correlation Between Lgm Risk and Causeway Global

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

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

Diversification Opportunities for Lgm Risk and Causeway Global

0.36

Correlation Coefficient

Lgm Risk  Causeway Global

Weak diversification

The 3 months correlation between Lgm and Causeway is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Lgm Risk Managed and Causeway Global Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Causeway Global Value and Lgm Risk 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 Lgm Risk Managed are associated (or correlated) with Causeway Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Causeway Global Value has no effect on the direction of Lgm Risk i.e., Lgm Risk and Causeway Global go up and down completely randomly.

Pair Corralation between Lgm Risk and Causeway Global

Assuming the 90 days horizon Lgm Risk is expected to generate 45.23 times less return on investment than Causeway Global. But when comparing it to its historical volatility, Lgm Risk Managed is 2.69 times less risky than Causeway Global. It trades about 0.02 of its potential returns per unit of risk. Causeway Global Value is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  1,285  in Causeway Global Value on December 4, 2024 and sell it today you would earn a total of  58.00  from holding Causeway Global Value or generate 4.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Lgm Risk Managed  vs.  Causeway Global Value

Lgm Risk Managed

Risk-Adjusted Performance

Very Weak

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

Causeway Global Value

Risk-Adjusted Performance

Very Weak

Over the last 90 days Causeway Global Value 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 forward 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.

Pair Trading with Lgm Risk and Causeway Global

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

The idea behind Lgm Risk Managed and Causeway 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.