Correlation Between Dana Large and Small Cap
Can any of the company-specific risk be diversified away by investing in both Dana Large 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 Dana Large and Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dana Large Cap and Small Cap Equity, you can compare the effects of market volatilities on Dana Large 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 Dana Large with a short position of Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dana Large and Small Cap.
Diversification Opportunities for Dana Large and Small Cap
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dana and Small is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Dana Large Cap and Small Cap Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Equity and Dana Large 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 Dana Large Cap 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 Equity has no effect on the direction of Dana Large i.e., Dana Large and Small Cap go up and down completely randomly.
Pair Corralation between Dana Large and Small Cap
Assuming the 90 days horizon Dana Large Cap is expected to generate 0.66 times more return on investment than Small Cap. However, Dana Large Cap is 1.51 times less risky than Small Cap. It trades about 0.11 of its potential returns per unit of risk. Small Cap Equity is currently generating about 0.05 per unit of risk. If you would invest 1,759 in Dana Large Cap on September 12, 2024 and sell it today you would earn a total of 948.00 from holding Dana Large Cap or generate 53.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dana Large Cap vs. Small Cap Equity
Performance |
| Timeline |
| Dana Large Cap |
| Small Cap Equity |
Dana Large and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dana Large and Small Cap
The main advantage of trading using opposite Dana Large and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dana Large 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.| Dana Large vs. Gabelli Gold Fund | Dana Large vs. Franklin Gold Precious | Dana Large vs. Europac Gold Fund | Dana Large vs. Sprott Gold Equity |
| Small Cap vs. Elfun Government Money | Small Cap vs. General Money Market | Small Cap vs. Ubs Money Series | Small Cap vs. Schwab Treasury Money |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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