Correlation Between Us Small and Steward Small-mid
Can any of the company-specific risk be diversified away by investing in both Us Small and Steward Small-mid 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 Us Small and Steward Small-mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Us Small Cap and Steward Small Mid Cap, you can compare the effects of market volatilities on Us Small and Steward Small-mid 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 Us Small with a short position of Steward Small-mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Small and Steward Small-mid.
Diversification Opportunities for Us Small and Steward Small-mid
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between DFSTX and Steward is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Us Small Cap and Steward Small Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steward Small Mid and Us 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 Us Small Cap are associated (or correlated) with Steward Small-mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steward Small Mid has no effect on the direction of Us Small i.e., Us Small and Steward Small-mid go up and down completely randomly.
Pair Corralation between Us Small and Steward Small-mid
Assuming the 90 days horizon Us Small is expected to generate 1.01 times less return on investment than Steward Small-mid. In addition to that, Us Small is 1.11 times more volatile than Steward Small Mid Cap. It trades about 0.07 of its total potential returns per unit of risk. Steward Small Mid Cap is currently generating about 0.07 per unit of volatility. If you would invest 1,235 in Steward Small Mid Cap on August 25, 2024 and sell it today you would earn a total of 227.00 from holding Steward Small Mid Cap or generate 18.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Us Small Cap vs. Steward Small Mid Cap
Performance |
| Timeline |
| Us Small Cap |
| Steward Small Mid |
Us Small and Steward Small-mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Us Small and Steward Small-mid
The main advantage of trading using opposite Us Small and Steward Small-mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Small position performs unexpectedly, Steward Small-mid 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 Steward Small-mid will offset losses from the drop in Steward Small-mid's long position.| Us Small vs. Intal High Relative | Us Small vs. Dfa International | Us Small vs. Dfa Inflation Protected | Us Small vs. Dfa International Small |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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