Correlation Between Small Cap and Mutual Of
Can any of the company-specific risk be diversified away by investing in both Small Cap and Mutual Of 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 Mutual Of 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 Mutual Of America, you can compare the effects of market volatilities on Small Cap and Mutual Of 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 Mutual Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Mutual Of.
Diversification Opportunities for Small Cap and Mutual Of
Almost no diversification
The 3 months correlation between Small and Mutual is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Equity and Mutual Of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mutual Of America 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 Mutual Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mutual Of America has no effect on the direction of Small Cap i.e., Small Cap and Mutual Of go up and down completely randomly.
Pair Corralation between Small Cap and Mutual Of
Assuming the 90 days horizon Small Cap Equity is expected to generate 1.88 times more return on investment than Mutual Of. However, Small Cap is 1.88 times more volatile than Mutual Of America. It trades about 0.24 of its potential returns per unit of risk. Mutual Of America is currently generating about 0.18 per unit of risk. If you would invest 1,865 in Small Cap Equity on August 30, 2024 and sell it today you would earn a total of 166.00 from holding Small Cap Equity or generate 8.9% 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. Mutual Of America
Performance |
| Timeline |
| Small Cap Equity |
| Mutual Of America |
Small Cap and Mutual Of Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Mutual Of
The main advantage of trading using opposite Small Cap and Mutual Of positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Mutual Of 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 Mutual Of will offset losses from the drop in Mutual Of's long position.| Small Cap vs. Growth Allocation Fund | Small Cap vs. Defensive Market Strategies | Small Cap vs. Defensive Market Strategies | Small Cap vs. Value Equity Institutional |
| Mutual Of vs. Small Cap Equity | Mutual Of vs. Vanguard Equity Income | Mutual Of vs. Artisan Select Equity | Mutual Of vs. Gmo Global 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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