Correlation Between Equity Growth and Walthausen Small
Can any of the company-specific risk be diversified away by investing in both Equity Growth and Walthausen 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 Equity Growth and Walthausen Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equity Growth Fund and Walthausen Small Cap, you can compare the effects of market volatilities on Equity Growth and Walthausen 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 Equity Growth with a short position of Walthausen Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equity Growth and Walthausen Small.
Diversification Opportunities for Equity Growth and Walthausen Small
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Equity and Walthausen is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Equity Growth Fund and Walthausen Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walthausen Small Cap and Equity Growth 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 Equity Growth Fund are associated (or correlated) with Walthausen Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walthausen Small Cap has no effect on the direction of Equity Growth i.e., Equity Growth and Walthausen Small go up and down completely randomly.
Pair Corralation between Equity Growth and Walthausen Small
Assuming the 90 days horizon Equity Growth is expected to generate 2.0 times less return on investment than Walthausen Small. But when comparing it to its historical volatility, Equity Growth Fund is 1.9 times less risky than Walthausen Small. It trades about 0.38 of its potential returns per unit of risk. Walthausen Small Cap is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 1,547 in Walthausen Small Cap on September 1, 2024 and sell it today you would earn a total of 204.00 from holding Walthausen Small Cap or generate 13.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Equity Growth Fund vs. Walthausen Small Cap
Performance |
| Timeline |
| Equity Growth |
| Walthausen Small Cap |
Equity Growth and Walthausen Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equity Growth and Walthausen Small
The main advantage of trading using opposite Equity Growth and Walthausen Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equity Growth position performs unexpectedly, Walthausen 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 Walthausen Small will offset losses from the drop in Walthausen Small's long position.| Equity Growth vs. Oklahoma College Savings | Equity Growth vs. Ab Bond Inflation | Equity Growth vs. Cref Inflation Linked Bond | Equity Growth vs. Ab Bond Inflation |
| Walthausen Small vs. Amg Southernsun Small | Walthausen Small vs. Wasatch Emerging Markets | Walthausen Small vs. Hodges Small Cap | Walthausen Small vs. Intrepid Endurance Fund |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |