Correlation Between Conestoga Micro and Conestoga Small
Can any of the company-specific risk be diversified away by investing in both Conestoga Micro and Conestoga 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 Conestoga Micro and Conestoga Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Conestoga Micro Cap and Conestoga Small Cap, you can compare the effects of market volatilities on Conestoga Micro and Conestoga 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 Conestoga Micro with a short position of Conestoga Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Conestoga Micro and Conestoga Small.
Diversification Opportunities for Conestoga Micro and Conestoga Small
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Conestoga and Conestoga is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Conestoga Micro Cap and Conestoga Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conestoga Small Cap and Conestoga Micro 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 Conestoga Micro Cap are associated (or correlated) with Conestoga Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conestoga Small Cap has no effect on the direction of Conestoga Micro i.e., Conestoga Micro and Conestoga Small go up and down completely randomly.
Pair Corralation between Conestoga Micro and Conestoga Small
Assuming the 90 days horizon Conestoga Micro Cap is expected to generate 1.25 times more return on investment than Conestoga Small. However, Conestoga Micro is 1.25 times more volatile than Conestoga Small Cap. It trades about 0.1 of its potential returns per unit of risk. Conestoga Small Cap is currently generating about 0.12 per unit of risk. If you would invest 695.00 in Conestoga Micro Cap on September 1, 2024 and sell it today you would earn a total of 137.00 from holding Conestoga Micro Cap or generate 19.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Conestoga Micro Cap vs. Conestoga Small Cap
Performance |
| Timeline |
| Conestoga Micro Cap |
| Conestoga Small Cap |
Conestoga Micro and Conestoga Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Conestoga Micro and Conestoga Small
The main advantage of trading using opposite Conestoga Micro and Conestoga Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Conestoga Micro position performs unexpectedly, Conestoga 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 Conestoga Small will offset losses from the drop in Conestoga Small's long position.| Conestoga Micro vs. Conestoga Micro Cap | Conestoga Micro vs. Columbia Large Cap | Conestoga Micro vs. Conestoga Smid Cap | Conestoga Micro vs. American Balanced Fund |
| Conestoga Small vs. Conestoga Micro Cap | Conestoga Small vs. Columbia Large Cap | Conestoga Small vs. Conestoga Smid Cap | Conestoga Small vs. American Balanced 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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