Correlation Between Cardinal Small and International Equity
Can any of the company-specific risk be diversified away by investing in both Cardinal Small and International Equity 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 Cardinal Small and International Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Small Cap and International Equity Index, you can compare the effects of market volatilities on Cardinal Small and International Equity 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 Cardinal Small with a short position of International Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Small and International Equity.
Diversification Opportunities for Cardinal Small and International Equity
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cardinal and International is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Small Cap and International Equity Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Equity and Cardinal Small 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 Cardinal Small Cap are associated (or correlated) with International Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Equity has no effect on the direction of Cardinal Small i.e., Cardinal Small and International Equity go up and down completely randomly.
Pair Corralation between Cardinal Small and International Equity
Assuming the 90 days horizon Cardinal Small Cap is expected to generate 1.14 times more return on investment than International Equity. However, Cardinal Small is 1.14 times more volatile than International Equity Index. It trades about 0.05 of its potential returns per unit of risk. International Equity Index is currently generating about 0.02 per unit of risk. If you would invest 1,300 in Cardinal Small Cap on September 12, 2024 and sell it today you would earn a total of 144.00 from holding Cardinal Small Cap or generate 11.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.36% |
| Values | Daily Returns |
Cardinal Small Cap vs. International Equity Index
Performance |
| Timeline |
| Cardinal Small Cap |
| International Equity |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Cardinal Small and International Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Small and International Equity
The main advantage of trading using opposite Cardinal Small and International Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Small position performs unexpectedly, International Equity 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 International Equity will offset losses from the drop in International Equity's long position.| Cardinal Small vs. Jennison Natural Resources | Cardinal Small vs. Tortoise Energy Independence | Cardinal Small vs. Gamco Natural Resources | Cardinal Small vs. Fidelity Advisor Energy |
| International Equity vs. Kinetics Small Cap | International Equity vs. Cardinal Small Cap | International Equity vs. Small Pany Growth | International Equity vs. Lebenthal Lisanti Small |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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