Correlation Between Rbc Bluebay and Lsv Small

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

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

Diversification Opportunities for Rbc Bluebay and Lsv Small

-0.35

Correlation Coefficient

Rbc Bluebay  Lsv Small

Very good diversification

The 3 months correlation between Rbc and Lsv is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Rbc Bluebay Emerging and Lsv Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lsv Small Cap and Rbc Bluebay 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 Rbc Bluebay Emerging are associated (or correlated) with Lsv Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lsv Small Cap has no effect on the direction of Rbc Bluebay i.e., Rbc Bluebay and Lsv Small go up and down completely randomly.

Pair Corralation between Rbc Bluebay and Lsv Small

Assuming the 90 days horizon Rbc Bluebay Emerging is expected to under-perform the Lsv Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Rbc Bluebay Emerging is 1.39 times less risky than Lsv Small. The mutual fund trades about -0.23 of its potential returns per unit of risk. The Lsv Small Cap is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,923  in Lsv Small Cap on September 26, 2024 and sell it today you would lose (43.00) from holding Lsv Small Cap or give up 2.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Rbc Bluebay Emerging  vs.  Lsv Small Cap

Rbc Bluebay Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rbc Bluebay Emerging 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 January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Lsv Small Cap

Risk-Adjusted Performance

0 of 100

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 fairly strong basic indicators, Lsv Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Rbc Bluebay and Lsv Small

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

The idea behind Rbc Bluebay Emerging and Lsv Small 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 Anywhere module to track or share privately all of your investments from the convenience of any device.