Correlation Between Us Small and Keeley Small-mid

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Can any of the company-specific risk be diversified away by investing in both Us Small and Keeley 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 Keeley 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 Keeley Small Mid Cap, you can compare the effects of market volatilities on Us Small and Keeley 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 Keeley Small-mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Small and Keeley Small-mid.

Diversification Opportunities for Us Small and Keeley Small-mid

0.96
  Correlation Coefficient

Almost no diversification

The 3 months correlation between DFSVX and Keeley is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Us Small Cap and Keeley Small Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keeley 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 Keeley 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 Keeley Small Mid has no effect on the direction of Us Small i.e., Us Small and Keeley Small-mid go up and down completely randomly.

Pair Corralation between Us Small and Keeley Small-mid

Assuming the 90 days horizon Us Small Cap is expected to generate 0.97 times more return on investment than Keeley Small-mid. However, Us Small Cap is 1.03 times less risky than Keeley Small-mid. It trades about 0.06 of its potential returns per unit of risk. Keeley Small Mid Cap is currently generating about 0.03 per unit of risk. If you would invest  3,811  in Us Small Cap on August 29, 2024 and sell it today you would earn a total of  1,474  from holding Us Small Cap or generate 38.68% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Us Small Cap  vs.  Keeley Small Mid Cap

 Performance 
       Timeline  
Us Small Cap 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Us Small Cap are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Us Small may actually be approaching a critical reversion point that can send shares even higher in December 2024.
Keeley Small Mid 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Keeley Small Mid Cap are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Keeley Small-mid may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Us Small and Keeley Small-mid Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Us Small and Keeley Small-mid

The main advantage of trading using opposite Us Small and Keeley Small-mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Small position performs unexpectedly, Keeley 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 Keeley Small-mid will offset losses from the drop in Keeley Small-mid's long position.
The idea behind Us Small Cap and Keeley Small Mid Cap 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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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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