Correlation Between Small Cap and Riverpark Floating
Can any of the company-specific risk be diversified away by investing in both Small Cap and Riverpark Floating 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 Riverpark Floating 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 Riverpark Floating Rate, you can compare the effects of market volatilities on Small Cap and Riverpark Floating 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 Riverpark Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Riverpark Floating.
Diversification Opportunities for Small Cap and Riverpark Floating
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Small and Riverpark is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Equity and Riverpark Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Riverpark Floating Rate 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 Riverpark Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Riverpark Floating Rate has no effect on the direction of Small Cap i.e., Small Cap and Riverpark Floating go up and down completely randomly.
Pair Corralation between Small Cap and Riverpark Floating
Assuming the 90 days horizon Small Cap Equity is expected to generate 12.74 times more return on investment than Riverpark Floating. However, Small Cap is 12.74 times more volatile than Riverpark Floating Rate. It trades about 0.03 of its potential returns per unit of risk. Riverpark Floating Rate is currently generating about 0.34 per unit of risk. If you would invest 1,584 in Small Cap Equity on October 9, 2024 and sell it today you would earn a total of 223.00 from holding Small Cap Equity or generate 14.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Equity vs. Riverpark Floating Rate
Performance |
| Timeline |
| Small Cap Equity |
| Riverpark Floating Rate |
Small Cap and Riverpark Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Riverpark Floating
The main advantage of trading using opposite Small Cap and Riverpark Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Riverpark Floating 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 Riverpark Floating will offset losses from the drop in Riverpark Floating's long position.| Small Cap vs. Short Term Government Fund | Small Cap vs. Intermediate Government Bond | Small Cap vs. Ab Government Exchange | Small Cap vs. Dreyfus Government Cash |
| Riverpark Floating vs. Driehaus Event Driven | Riverpark Floating vs. Rivernorth E Opportunity | Riverpark Floating vs. Wasatch Frontier Emerging | Riverpark Floating vs. Tidal ETF Trust |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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