Correlation Between Small Cap and Americafirst Large
Can any of the company-specific risk be diversified away by investing in both Small Cap and Americafirst Large 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 Americafirst Large 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 Americafirst Large Cap, you can compare the effects of market volatilities on Small Cap and Americafirst Large 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 Americafirst Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Americafirst Large.
Diversification Opportunities for Small Cap and Americafirst Large
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Small and Americafirst is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Value and Americafirst Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Americafirst Large Cap 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 Americafirst Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Americafirst Large Cap has no effect on the direction of Small Cap i.e., Small Cap and Americafirst Large go up and down completely randomly.
Pair Corralation between Small Cap and Americafirst Large
Assuming the 90 days horizon Small Cap Value is expected to under-perform the Americafirst Large. In addition to that, Small Cap is 1.21 times more volatile than Americafirst Large Cap. It trades about -0.23 of its total potential returns per unit of risk. Americafirst Large Cap is currently generating about -0.25 per unit of volatility. If you would invest 1,442 in Americafirst Large Cap on November 28, 2024 and sell it today you would lose (57.00) from holding Americafirst Large Cap or give up 3.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Small Cap Value vs. Americafirst Large Cap
Performance |
| Timeline |
| Small Cap Value |
| Americafirst Large Cap |
Small Cap and Americafirst Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Americafirst Large
The main advantage of trading using opposite Small Cap and Americafirst Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Americafirst Large 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 Americafirst Large will offset losses from the drop in Americafirst Large's long position.| Small Cap vs. Glg Intl Small | Small Cap vs. Legg Mason Partners | Small Cap vs. Sp Smallcap 600 | Small Cap vs. Needham Small Cap |
| Americafirst Large vs. Pace High Yield | Americafirst Large vs. Pace High Yield | Americafirst Large vs. Artisan High Income | Americafirst Large vs. Prudential 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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