Correlation Between Lkcm International and Qs Large

Can any of the company-specific risk be diversified away by investing in both Lkcm International and Qs Large 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 Qs Large 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 Qs Large Cap, you can compare the effects of market volatilities on Lkcm International and Qs Large 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 Qs Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lkcm International and Qs Large.

Diversification Opportunities for Lkcm International and Qs Large

-0.42

Correlation Coefficient

Lkcm International  Qs Large

Very good diversification

The 3 months correlation between Lkcm and LMTIX is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Lkcm International Equity and Qs Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qs Large 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 Qs Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qs Large Cap has no effect on the direction of Lkcm International i.e., Lkcm International and Qs Large go up and down completely randomly.

Pair Corralation between Lkcm International and Qs Large

Assuming the 90 days horizon Lkcm International Equity is expected to generate 0.88 times more return on investment than Qs Large. However, Lkcm International Equity is 1.14 times less risky than Qs Large. It trades about 0.16 of its potential returns per unit of risk. Qs Large Cap is currently generating about 0.09 per unit of risk. If you would invest  1,359  in Lkcm International Equity on September 13, 2024 and sell it today you would earn a total of  24.00  from holding Lkcm International Equity or generate 1.77% return on investment over 90 days.

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

Lkcm International Equity  vs.  Qs Large Cap

Lkcm International Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lkcm International Equity has generated negative risk-adjusted returns adding no value to fund investors. 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.

Qs Large Cap

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Qs Large Cap are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Qs Large may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Lkcm International and Qs Large

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

The idea behind Lkcm International Equity and Qs Large 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.