Correlation Between Us Small and Sextant Growth
Can any of the company-specific risk be diversified away by investing in both Us Small and Sextant Growth 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 Sextant Growth 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 Sextant Growth Fund, you can compare the effects of market volatilities on Us Small and Sextant Growth 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 Sextant Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Small and Sextant Growth.
Diversification Opportunities for Us Small and Sextant Growth
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between DFSVX and Sextant is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Us Small Cap and Sextant Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sextant Growth 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 Sextant Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sextant Growth has no effect on the direction of Us Small i.e., Us Small and Sextant Growth go up and down completely randomly.
Pair Corralation between Us Small and Sextant Growth
Assuming the 90 days horizon Us Small Cap is expected to generate 1.62 times more return on investment than Sextant Growth. However, Us Small is 1.62 times more volatile than Sextant Growth Fund. It trades about 0.11 of its potential returns per unit of risk. Sextant Growth Fund is currently generating about 0.15 per unit of risk. If you would invest 4,888 in Us Small Cap on September 13, 2024 and sell it today you would earn a total of 313.00 from holding Us Small Cap or generate 6.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.67% |
| Values | Daily Returns |
Us Small Cap vs. Sextant Growth Fund
Performance |
| Timeline |
| Us Small Cap |
| Sextant Growth |
Us Small and Sextant Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Us Small and Sextant Growth
The main advantage of trading using opposite Us Small and Sextant Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Small position performs unexpectedly, Sextant Growth 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 Sextant Growth will offset losses from the drop in Sextant Growth's long position.| Us Small vs. Us Micro Cap | Us Small vs. Dfa International Small | Us Small vs. Us Large Cap | Us Small vs. International Small Pany |
| Sextant Growth vs. Sextant International Fund | Sextant Growth vs. Sextant Bond Income | Sextant Growth vs. Teton Westwood Equity | Sextant Growth vs. Value Line Premier |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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