Correlation Between James Balanced and James Small
Can any of the company-specific risk be diversified away by investing in both James Balanced and James Small 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 James Balanced and James Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between James Balanced Golden and James Small Cap, you can compare the effects of market volatilities on James Balanced and James Small 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 James Balanced with a short position of James Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of James Balanced and James Small.
Diversification Opportunities for James Balanced and James Small
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between James and James is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding James Balanced Golden and James Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on James Small Cap and James Balanced 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 James Balanced Golden are associated (or correlated) with James Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of James Small Cap has no effect on the direction of James Balanced i.e., James Balanced and James Small go up and down completely randomly.
Pair Corralation between James Balanced and James Small
Assuming the 90 days horizon James Balanced is expected to generate 17.82 times less return on investment than James Small. But when comparing it to its historical volatility, James Balanced Golden is 3.33 times less risky than James Small. It trades about 0.04 of its potential returns per unit of risk. James Small Cap is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 4,089 in James Small Cap on August 27, 2024 and sell it today you would earn a total of 273.00 from holding James Small Cap or generate 6.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
James Balanced Golden vs. James Small Cap
Performance |
| Timeline |
| James Balanced Golden |
| James Small Cap |
James Balanced and James Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with James Balanced and James Small
The main advantage of trading using opposite James Balanced and James Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if James Balanced position performs unexpectedly, James Small 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 James Small will offset losses from the drop in James Small's long position.| James Balanced vs. Westwood Income Opportunity | James Balanced vs. First Eagle Global | James Balanced vs. Berwyn Income Fund | James Balanced vs. Fpa Crescent Fund |
| James Small vs. James Balanced Golden | James Small vs. Sterling Capital Stratton | James Small vs. Perritt Microcap Opportunities | James Small vs. Royce Smaller Companies Growth |
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 CEOs Directory module to screen CEOs from public companies around the world.
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