Correlation Between Lkcm Small and Real Estate
Can any of the company-specific risk be diversified away by investing in both Lkcm Small and Real Estate 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 Small and Real Estate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lkcm Small Mid Cap and Real Estate Ultrasector, you can compare the effects of market volatilities on Lkcm Small and Real Estate 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 Small with a short position of Real Estate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lkcm Small and Real Estate.
Diversification Opportunities for Lkcm Small and Real Estate
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lkcm and Real is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Lkcm Small Mid Cap and Real Estate Ultrasector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Estate Ultrasector and Lkcm Small 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 Small Mid Cap are associated (or correlated) with Real Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Estate Ultrasector has no effect on the direction of Lkcm Small i.e., Lkcm Small and Real Estate go up and down completely randomly.
Pair Corralation between Lkcm Small and Real Estate
Assuming the 90 days horizon Lkcm Small is expected to generate 1.17 times less return on investment than Real Estate. But when comparing it to its historical volatility, Lkcm Small Mid Cap is 1.37 times less risky than Real Estate. It trades about 0.03 of its potential returns per unit of risk. Real Estate Ultrasector is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 4,550 in Real Estate Ultrasector on September 10, 2024 and sell it today you would earn a total of 23.00 from holding Real Estate Ultrasector or generate 0.51% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.24% |
Values | Daily Returns |
Lkcm Small Mid Cap vs. Real Estate Ultrasector
Performance |
Timeline |
Lkcm Small Mid |
Real Estate Ultrasector |
Lkcm Small and Real Estate Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lkcm Small and Real Estate
The main advantage of trading using opposite Lkcm Small and Real Estate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lkcm Small position performs unexpectedly, Real Estate 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 Real Estate will offset losses from the drop in Real Estate's long position.Lkcm Small vs. Commonwealth Global Fund | Lkcm Small vs. Federated High Yield | Lkcm Small vs. Scharf Fund Institutional | Lkcm Small vs. Qs Growth Fund |
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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