Correlation Between Lkcm Equity and Lkcm Aquinas

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

By analyzing existing cross correlation between Lkcm Equity Fund and Lkcm Aquinas Catholic, you can compare the effects of market volatilities on Lkcm Equity and Lkcm Aquinas 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 Lkcm Equity with a short position of Lkcm Aquinas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lkcm Equity and Lkcm Aquinas.

Diversification Opportunities for Lkcm Equity and Lkcm Aquinas

0.96

Correlation Coefficient

Lkcm Equity  Lkcm Aquinas

Almost no diversification

The 3 months correlation between Lkcm and Lkcm is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Lkcm Equity Fund and Lkcm Aquinas Catholic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lkcm Aquinas Catholic and Lkcm Equity 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 Lkcm Equity Fund are associated (or correlated) with Lkcm Aquinas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lkcm Aquinas Catholic has no effect on the direction of Lkcm Equity i.e., Lkcm Equity and Lkcm Aquinas go up and down completely randomly.

Pair Corralation between Lkcm Equity and Lkcm Aquinas

Assuming the 90 days horizon Lkcm Equity Fund is expected to under-perform the Lkcm Aquinas. But the mutual fund apears to be less risky and, when comparing its historical volatility, Lkcm Equity Fund is 1.02 times less risky than Lkcm Aquinas. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Lkcm Aquinas Catholic is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,762  in Lkcm Aquinas Catholic on December 28, 2024 and sell it today you would lose (32.00) from holding Lkcm Aquinas Catholic or give up 1.82% of portfolio value over 90 days.

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

Lkcm Equity Fund  vs.  Lkcm Aquinas Catholic

Lkcm Equity Fund

Risk-Adjusted Performance

Very Weak

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

Lkcm Aquinas Catholic

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Lkcm Equity and Lkcm Aquinas

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

The idea behind Lkcm Equity Fund and Lkcm Aquinas Catholic 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.