Correlation Between Lkcm International and Vanguard Total

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

Diversification Opportunities for Lkcm International and Vanguard Total

0.94

Correlation Coefficient

Lkcm International  Vanguard Total

Almost no diversification

The 3 months correlation between Lkcm and VANGUARD is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Lkcm International Equity and Vanguard Total International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Inter 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 Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Inter has no effect on the direction of Lkcm International i.e., Lkcm International and Vanguard Total go up and down completely randomly.

Pair Corralation between Lkcm International and Vanguard Total

Assuming the 90 days horizon Lkcm International is expected to generate 1.13 times less return on investment than Vanguard Total. In addition to that, Lkcm International is 1.16 times more volatile than Vanguard Total International. It trades about 0.11 of its total potential returns per unit of risk. Vanguard Total International is currently generating about 0.14 per unit of volatility. If you would invest  1,897  in Vanguard Total International on December 29, 2024 and sell it today you would earn a total of  134.00  from holding Vanguard Total International or generate 7.06% return on investment over 90 days.

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

Lkcm International Equity  vs.  Vanguard Total International

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 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Lkcm International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Vanguard Total Inter

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total International are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Total may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Lkcm International and Vanguard Total

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

The idea behind Lkcm International Equity and Vanguard Total International 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.