Correlation Between Smallcap World and First Investors
Can any of the company-specific risk be diversified away by investing in both Smallcap World and First Investors 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 Smallcap World and First Investors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smallcap World Fund and First Investors Total, you can compare the effects of market volatilities on Smallcap World and First Investors 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 Smallcap World with a short position of First Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap World and First Investors.
Diversification Opportunities for Smallcap World and First Investors
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Smallcap and First is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap World Fund and First Investors Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Investors Total and Smallcap World 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 Smallcap World Fund are associated (or correlated) with First Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Investors Total has no effect on the direction of Smallcap World i.e., Smallcap World and First Investors go up and down completely randomly.
Pair Corralation between Smallcap World and First Investors
If you would invest 6,786 in Smallcap World Fund on November 3, 2024 and sell it today you would earn a total of 186.00 from holding Smallcap World Fund or generate 2.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Smallcap World Fund vs. First Investors Total
Performance |
| Timeline |
| Smallcap World |
| First Investors Total |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Smallcap World and First Investors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap World and First Investors
The main advantage of trading using opposite Smallcap World and First Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap World position performs unexpectedly, First Investors 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 First Investors will offset losses from the drop in First Investors' long position.| Smallcap World vs. Small Cap Value | Smallcap World vs. Great West Loomis Sayles | Smallcap World vs. Small Cap Value Fund | Smallcap World vs. Ultrasmall Cap Profund Ultrasmall Cap |
| First Investors vs. Short Oil Gas | First Investors vs. Fidelity Advisor Energy | First Investors vs. Firsthand Alternative Energy | First Investors vs. Goehring Rozencwajg Resources |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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