Correlation Between Fam Small and Fam Value
Can any of the company-specific risk be diversified away by investing in both Fam Small and Fam Value 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 Fam Small and Fam Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fam Small Cap and Fam Value Fund, you can compare the effects of market volatilities on Fam Small and Fam Value 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 Fam Small with a short position of Fam Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fam Small and Fam Value.
Diversification Opportunities for Fam Small and Fam Value
No risk reduction
The 3 months correlation between Fam and FAM is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Fam Small Cap and Fam Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fam Value Fund and Fam 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 Fam Small Cap are associated (or correlated) with Fam Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fam Value Fund has no effect on the direction of Fam Small i.e., Fam Small and Fam Value go up and down completely randomly.
Pair Corralation between Fam Small and Fam Value
Assuming the 90 days horizon Fam Small Cap is expected to generate 1.16 times more return on investment than Fam Value. However, Fam Small is 1.16 times more volatile than Fam Value Fund. It trades about 0.4 of its potential returns per unit of risk. Fam Value Fund is currently generating about 0.36 per unit of risk. If you would invest 2,742 in Fam Small Cap on September 1, 2024 and sell it today you would earn a total of 291.00 from holding Fam Small Cap or generate 10.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fam Small Cap vs. Fam Value Fund
Performance |
| Timeline |
| Fam Small Cap |
| Fam Value Fund |
Fam Small and Fam Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fam Small and Fam Value
The main advantage of trading using opposite Fam Small and Fam Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fam Small position performs unexpectedly, Fam Value 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 Fam Value will offset losses from the drop in Fam Value's long position.| Fam Small vs. Fam Equity Income Fund | Fam Small vs. Fam Value Fund | Fam Small vs. Sound Shore Fund | Fam Small vs. Consumer Services Ultrasector |
| Fam Value vs. Fam Equity Income Fund | Fam Value vs. Meridian Growth Fund | Fam Value vs. Muhlenkamp Fund Institutional | Fam Value vs. Royce Pennsylvania Mutual |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |