Correlation Between Small Cap and Dana Large
Can any of the company-specific risk be diversified away by investing in both Small Cap and Dana Large 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 Small Cap and Dana Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Equity and Dana Large Cap, you can compare the effects of market volatilities on Small Cap and Dana Large 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 Small Cap with a short position of Dana Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Dana Large.
Diversification Opportunities for Small Cap and Dana Large
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Small and Dana is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Equity and Dana Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dana Large Cap and Small Cap 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 Small Cap Equity are associated (or correlated) with Dana Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dana Large Cap has no effect on the direction of Small Cap i.e., Small Cap and Dana Large go up and down completely randomly.
Pair Corralation between Small Cap and Dana Large
Assuming the 90 days horizon Small Cap is expected to generate 1.65 times less return on investment than Dana Large. In addition to that, Small Cap is 1.51 times more volatile than Dana Large Cap. It trades about 0.05 of its total potential returns per unit of risk. Dana Large Cap is currently generating about 0.11 per unit of volatility. 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 |
Small Cap Equity vs. Dana Large Cap
Performance |
| Timeline |
| Small Cap Equity |
| Dana Large Cap |
Small Cap and Dana Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Dana Large
The main advantage of trading using opposite Small Cap and Dana Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Dana Large 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 Dana Large will offset losses from the drop in Dana Large's long position.| Small Cap vs. Elfun Government Money | Small Cap vs. General Money Market | Small Cap vs. Ubs Money Series | Small Cap vs. Schwab Treasury Money |
| Dana Large vs. Gabelli Gold Fund | Dana Large vs. Franklin Gold Precious | Dana Large vs. Europac Gold Fund | Dana Large vs. Sprott Gold Equity |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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