Correlation Between Lkcm International and Lkcm Small

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

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

Diversification Opportunities for Lkcm International and Lkcm Small

0.0

Correlation Coefficient

Lkcm International  Lkcm Small

Pay attention - limited upside

The 3 months correlation between Lkcm and Lkcm is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lkcm International Equity and Lkcm Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lkcm Small Cap and Lkcm International 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 International Equity are associated (or correlated) with Lkcm Small. 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 Cap has no effect on the direction of Lkcm International i.e., Lkcm International and Lkcm Small go up and down completely randomly.

Pair Corralation between Lkcm International and Lkcm Small

If you would invest  1,319  in Lkcm International Equity on December 27, 2024 and sell it today you would earn a total of  67.00  from holding Lkcm International Equity or generate 5.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.64%
Values	Daily Returns

Lkcm International Equity  vs.  Lkcm Small Cap

Lkcm International Equity

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lkcm International Equity are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Lkcm International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lkcm Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lkcm Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Lkcm Small 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 International and Lkcm Small

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

The idea behind Lkcm International Equity and Lkcm Small 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.