Correlation Between Matson Money and Small Cap
Can any of the company-specific risk be diversified away by investing in both Matson Money 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 Matson Money and Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matson Money Equity and Small Cap Growth, you can compare the effects of market volatilities on Matson Money 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 Matson Money with a short position of Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matson Money and Small Cap.
Diversification Opportunities for Matson Money and Small Cap
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Matson and Small is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Matson Money Equity and Small Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Growth and Matson Money 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 Matson Money Equity 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 Growth has no effect on the direction of Matson Money i.e., Matson Money and Small Cap go up and down completely randomly.
Pair Corralation between Matson Money and Small Cap
Assuming the 90 days horizon Matson Money Equity is expected to under-perform the Small Cap. But the mutual fund apears to be less risky and, when comparing its historical volatility, Matson Money Equity is 1.63 times less risky than Small Cap. The mutual fund trades about -0.11 of its potential returns per unit of risk. The Small Cap Growth is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,694 in Small Cap Growth on September 12, 2024 and sell it today you would lose (1.00) from holding Small Cap Growth or give up 0.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Matson Money Equity vs. Small Cap Growth
Performance |
| Timeline |
| Matson Money Equity |
| Small Cap Growth |
Matson Money and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matson Money and Small Cap
The main advantage of trading using opposite Matson Money and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matson Money 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.| Matson Money vs. Vanguard Total Stock | Matson Money vs. Vanguard 500 Index | Matson Money vs. Vanguard Total Stock | Matson Money vs. Vanguard Total Stock |
| Small Cap vs. Sierra E Retirement | Small Cap vs. Qs Moderate Growth | Small Cap vs. College Retirement Equities | Small Cap vs. Transamerica Cleartrack Retirement |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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