Correlation Between Lsv Small and Leisure Fund

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

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

Diversification Opportunities for Lsv Small and Leisure Fund

0.52

Correlation Coefficient

Lsv Small  Leisure Fund

Very weak diversification

The 3 months correlation between Lsv and Leisure is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Lsv Small Cap and Leisure Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leisure Fund Class and Lsv 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 Lsv Small Cap are associated (or correlated) with Leisure Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leisure Fund Class has no effect on the direction of Lsv Small i.e., Lsv Small and Leisure Fund go up and down completely randomly.

Pair Corralation between Lsv Small and Leisure Fund

Assuming the 90 days horizon Lsv Small Cap is expected to under-perform the Leisure Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, Lsv Small Cap is 1.04 times less risky than Leisure Fund. The mutual fund trades about -0.1 of its potential returns per unit of risk. The Leisure Fund Class is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  8,150  in Leisure Fund Class on December 20, 2024 and sell it today you would lose (166.00) from holding Leisure Fund Class or give up 2.04% of portfolio value over 90 days.

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

Lsv Small Cap  vs.  Leisure Fund Class

Lsv Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lsv Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Leisure Fund Class

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Lsv Small and Leisure Fund

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

The idea behind Lsv Small Cap and Leisure Fund Class 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.