Correlation Between Lsv Conservative and Lsv Global

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

By analyzing existing cross correlation between Lsv Servative Value and Lsv Global Value, you can compare the effects of market volatilities on Lsv Conservative and Lsv Global 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 Conservative with a short position of Lsv Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lsv Conservative and Lsv Global.

Diversification Opportunities for Lsv Conservative and Lsv Global

0.7

Correlation Coefficient

Lsv Conservative  Lsv Global

Poor diversification

The 3 months correlation between LSV and Lsv is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Lsv Servative Value and Lsv Global Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lsv Global Value and Lsv Conservative 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 Servative Value are associated (or correlated) with Lsv Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lsv Global Value has no effect on the direction of Lsv Conservative i.e., Lsv Conservative and Lsv Global go up and down completely randomly.

Pair Corralation between Lsv Conservative and Lsv Global

Assuming the 90 days horizon Lsv Servative Value is expected to under-perform the Lsv Global. But the mutual fund apears to be less risky and, when comparing its historical volatility, Lsv Servative Value is 1.1 times less risky than Lsv Global. The mutual fund trades about -0.09 of its potential returns per unit of risk. The Lsv Global Value is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,475  in Lsv Global Value on November 28, 2024 and sell it today you would earn a total of  9.00  from holding Lsv Global Value or generate 0.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Lsv Servative Value  vs.  Lsv Global Value

Lsv Servative Value

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lsv Servative Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Lsv Global Value

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lsv Global Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Lsv Global 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 Conservative and Lsv Global

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

The idea behind Lsv Servative Value and Lsv Global Value 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.