Correlation Between Small Cap and Mesirow Financial
Can any of the company-specific risk be diversified away by investing in both Small Cap and Mesirow Financial 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 Small Cap and Mesirow Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Value and Mesirow Financial Small, you can compare the effects of market volatilities on Small Cap and Mesirow Financial 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 Small Cap with a short position of Mesirow Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Mesirow Financial.
Diversification Opportunities for Small Cap and Mesirow Financial
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Small and Mesirow is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Value and Mesirow Financial Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesirow Financial Small and Small Cap 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 Small Cap Value are associated (or correlated) with Mesirow Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesirow Financial Small has no effect on the direction of Small Cap i.e., Small Cap and Mesirow Financial go up and down completely randomly.
Pair Corralation between Small Cap and Mesirow Financial
Assuming the 90 days horizon Small Cap Value is expected to generate 1.32 times more return on investment than Mesirow Financial. However, Small Cap is 1.32 times more volatile than Mesirow Financial Small. It trades about 0.27 of its potential returns per unit of risk. Mesirow Financial Small is currently generating about 0.21 per unit of risk. If you would invest 987.00 in Small Cap Value on September 4, 2024 and sell it today you would earn a total of 97.00 from holding Small Cap Value or generate 9.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Value vs. Mesirow Financial Small
Performance |
| Timeline |
| Small Cap Value |
| Mesirow Financial Small |
Small Cap and Mesirow Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Mesirow Financial
The main advantage of trading using opposite Small Cap and Mesirow Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Mesirow Financial 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 Mesirow Financial will offset losses from the drop in Mesirow Financial's long position.| Small Cap vs. Mesirow Financial Small | Small Cap vs. Angel Oak Financial | Small Cap vs. Prudential Jennison Financial | Small Cap vs. Fidelity Advisor Financial |
| Mesirow Financial vs. Ab Global Risk | Mesirow Financial vs. Guggenheim High Yield | Mesirow Financial vs. Siit High Yield | Mesirow Financial vs. Pioneer High Yield |
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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