Correlation Between ANT and Royce Micro-cap
Can any of the company-specific risk be diversified away by investing in both ANT and Royce Micro-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 ANT and Royce Micro-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ANT and Royce Micro Cap Fund, you can compare the effects of market volatilities on ANT and Royce Micro-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 ANT with a short position of Royce Micro-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of ANT and Royce Micro-cap.
Diversification Opportunities for ANT and Royce Micro-cap
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between ANT and Royce is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding ANT and Royce Micro Cap Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royce Micro Cap and ANT 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 ANT are associated (or correlated) with Royce Micro-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royce Micro Cap has no effect on the direction of ANT i.e., ANT and Royce Micro-cap go up and down completely randomly.
Pair Corralation between ANT and Royce Micro-cap
Assuming the 90 days trading horizon ANT is expected to generate 46.22 times more return on investment than Royce Micro-cap. However, ANT is 46.22 times more volatile than Royce Micro Cap Fund. It trades about 0.12 of its potential returns per unit of risk. Royce Micro Cap Fund is currently generating about 0.02 per unit of risk. If you would invest 933.00 in ANT on November 2, 2024 and sell it today you would lose (786.00) from holding ANT or give up 84.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 73.39% |
| Values | Daily Returns |
ANT vs. Royce Micro Cap Fund
Performance |
| Timeline |
| ANT |
| Royce Micro Cap |
ANT and Royce Micro-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ANT and Royce Micro-cap
The main advantage of trading using opposite ANT and Royce Micro-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ANT position performs unexpectedly, Royce Micro-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 Royce Micro-cap will offset losses from the drop in Royce Micro-cap's long position.The idea behind ANT and Royce Micro Cap Fund 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.| Royce Micro-cap vs. Royce Opportunity Fund | Royce Micro-cap vs. Royce Opportunity Fund | Royce Micro-cap vs. Royce Opportunity Fund | Royce Micro-cap vs. Royce Premier 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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