Correlation Between 361 Global and Small Cap
Can any of the company-specific risk be diversified away by investing in both 361 Global and Small Cap 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 361 Global and Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 361 Global Longshort and Small Cap Growth, you can compare the effects of market volatilities on 361 Global and Small Cap 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 361 Global with a short position of Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of 361 Global and Small Cap.
Diversification Opportunities for 361 Global and Small Cap
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 361 and Small is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding 361 Global Longshort and Small Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Growth and 361 Global 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 361 Global Longshort are associated (or correlated) with Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Growth has no effect on the direction of 361 Global i.e., 361 Global and Small Cap go up and down completely randomly.
Pair Corralation between 361 Global and Small Cap
Assuming the 90 days horizon 361 Global is expected to generate 2.97 times less return on investment than Small Cap. But when comparing it to its historical volatility, 361 Global Longshort is 2.39 times less risky than Small Cap. It trades about 0.05 of its potential returns per unit of risk. Small Cap Growth is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,732 in Small Cap Growth on September 4, 2024 and sell it today you would earn a total of 694.00 from holding Small Cap Growth or generate 40.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
361 Global Longshort vs. Small Cap Growth
Performance |
| Timeline |
| 361 Global Longshort |
| Small Cap Growth |
361 Global and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 361 Global and Small Cap
The main advantage of trading using opposite 361 Global and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 361 Global position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| 361 Global vs. Aqr Large Cap | 361 Global vs. Americafirst Large Cap | 361 Global vs. Siit Large Cap | 361 Global vs. Qs Large Cap |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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