Correlation Between Lsv Managed and Lsv Servative

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

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

Diversification Opportunities for Lsv Managed and Lsv Servative

0.96

Correlation Coefficient

Lsv Managed  Lsv Servative

Almost no diversification

The 3 months correlation between Lsv and Lsv is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Lsv Managed Volatility and Lsv Servative Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lsv Servative Value and Lsv Managed 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 Managed Volatility are associated (or correlated) with Lsv Servative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lsv Servative Value has no effect on the direction of Lsv Managed i.e., Lsv Managed and Lsv Servative go up and down completely randomly.

Pair Corralation between Lsv Managed and Lsv Servative

Assuming the 90 days horizon Lsv Managed is expected to generate 1.77 times less return on investment than Lsv Servative. But when comparing it to its historical volatility, Lsv Managed Volatility is 1.15 times less risky than Lsv Servative. It trades about 0.07 of its potential returns per unit of risk. Lsv Servative Value is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,315  in Lsv Servative Value on May 6, 2025 and sell it today you would earn a total of  63.00  from holding Lsv Servative Value or generate 4.79% return on investment over 90 days.

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

Lsv Managed Volatility  vs.  Lsv Servative Value

Lsv Managed Volatility

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lsv Managed Volatility are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Lsv Managed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lsv Servative Value

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lsv Servative Value are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Lsv Servative 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 Managed and Lsv Servative

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

The idea behind Lsv Managed Volatility and Lsv Servative 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.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.