Correlation Between LSI Industries and Virtus Emerging

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

By analyzing existing cross correlation between LSI Industries and Virtus Emerging Markets, you can compare the effects of market volatilities on LSI Industries and Virtus Emerging 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 LSI Industries with a short position of Virtus Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of LSI Industries and Virtus Emerging.

Diversification Opportunities for LSI Industries and Virtus Emerging

0.12

Correlation Coefficient

LSI Industries  Virtus Emerging

Average diversification

The 3 months correlation between LSI and Virtus is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding LSI Industries and Virtus Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Emerging Markets and LSI Industries 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 LSI Industries are associated (or correlated) with Virtus Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Emerging Markets has no effect on the direction of LSI Industries i.e., LSI Industries and Virtus Emerging go up and down completely randomly.

Pair Corralation between LSI Industries and Virtus Emerging

Given the investment horizon of 90 days LSI Industries is expected to generate 2.08 times more return on investment than Virtus Emerging. However, LSI Industries is 2.08 times more volatile than Virtus Emerging Markets. It trades about 0.1 of its potential returns per unit of risk. Virtus Emerging Markets is currently generating about 0.01 per unit of risk. If you would invest  1,430  in LSI Industries on February 18, 2024 and sell it today you would earn a total of  149.00  from holding LSI Industries or generate 10.42% return on investment over 90 days.

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

LSI Industries  vs.  Virtus Emerging Markets

LSI Industries

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LSI Industries are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, LSI Industries may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Virtus Emerging Markets

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Emerging Markets are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Virtus Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with LSI Industries and Virtus Emerging

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

The idea behind LSI Industries and Virtus Emerging Markets 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.