Correlation Between Scout Small and Lebenthal Lisanti

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

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

Diversification Opportunities for Scout Small and Lebenthal Lisanti

0.81

Correlation Coefficient

Scout Small  Lebenthal Lisanti

Very poor diversification

The 3 months correlation between Scout and Lebenthal is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Scout Small Cap and Lebenthal Lisanti Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lebenthal Lisanti Small and Scout 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 Scout Small Cap are associated (or correlated) with Lebenthal Lisanti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lebenthal Lisanti Small has no effect on the direction of Scout Small i.e., Scout Small and Lebenthal Lisanti go up and down completely randomly.

Pair Corralation between Scout Small and Lebenthal Lisanti

Assuming the 90 days horizon Scout Small is expected to generate 1.24 times less return on investment than Lebenthal Lisanti. In addition to that, Scout Small is 1.01 times more volatile than Lebenthal Lisanti Small. It trades about 0.02 of its total potential returns per unit of risk. Lebenthal Lisanti Small is currently generating about 0.03 per unit of volatility. If you would invest  1,579  in Lebenthal Lisanti Small on December 4, 2024 and sell it today you would earn a total of  261.00  from holding Lebenthal Lisanti Small or generate 16.53% return on investment over 90 days.

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

Scout Small Cap  vs.  Lebenthal Lisanti Small

Scout Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Scout Small Cap 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 technical indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Lebenthal Lisanti Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lebenthal Lisanti Small 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 technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Scout Small and Lebenthal Lisanti

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

The idea behind Scout Small Cap and Lebenthal Lisanti Small 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.