Correlation Between Doubleline Emerging and Small Cap
Can any of the company-specific risk be diversified away by investing in both Doubleline Emerging and Small Cap 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 Doubleline Emerging and Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Doubleline Emerging Markets and Small Cap Value Fund, you can compare the effects of market volatilities on Doubleline Emerging and Small Cap 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 Doubleline Emerging with a short position of Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Doubleline Emerging and Small Cap.
Diversification Opportunities for Doubleline Emerging and Small Cap
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Doubleline and Small is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Doubleline Emerging Markets and Small Cap Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Value and Doubleline Emerging 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 Doubleline Emerging Markets are associated (or correlated) with Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Value has no effect on the direction of Doubleline Emerging i.e., Doubleline Emerging and Small Cap go up and down completely randomly.
Pair Corralation between Doubleline Emerging and Small Cap
Assuming the 90 days horizon Doubleline Emerging Markets is expected to under-perform the Small Cap. But the mutual fund apears to be less risky and, when comparing its historical volatility, Doubleline Emerging Markets is 3.88 times less risky than Small Cap. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Small Cap Value Fund is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 3,969 in Small Cap Value Fund on September 1, 2024 and sell it today you would earn a total of 402.00 from holding Small Cap Value Fund or generate 10.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Doubleline Emerging Markets vs. Small Cap Value Fund
Performance |
| Timeline |
| Doubleline Emerging |
| Small Cap Value |
Doubleline Emerging and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Doubleline Emerging and Small Cap
The main advantage of trading using opposite Doubleline Emerging and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Doubleline Emerging position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.The idea behind Doubleline Emerging Markets and Small Cap Value Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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