Correlation Between Small Cap and Saat Defensive
Can any of the company-specific risk be diversified away by investing in both Small Cap and Saat Defensive 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 Saat Defensive 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 Saat Defensive Strategy, you can compare the effects of market volatilities on Small Cap and Saat Defensive 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 Saat Defensive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Saat Defensive.
Diversification Opportunities for Small Cap and Saat Defensive
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Small and Saat is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Equity and Saat Defensive Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saat Defensive Strategy 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 Saat Defensive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saat Defensive Strategy has no effect on the direction of Small Cap i.e., Small Cap and Saat Defensive go up and down completely randomly.
Pair Corralation between Small Cap and Saat Defensive
Assuming the 90 days horizon Small Cap Equity is expected to generate 12.14 times more return on investment than Saat Defensive. However, Small Cap is 12.14 times more volatile than Saat Defensive Strategy. It trades about 0.03 of its potential returns per unit of risk. Saat Defensive Strategy is currently generating about 0.09 per unit of risk. If you would invest 1,848 in Small Cap Equity on October 24, 2024 and sell it today you would earn a total of 35.00 from holding Small Cap Equity or generate 1.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Equity vs. Saat Defensive Strategy
Performance |
| Timeline |
| Small Cap Equity |
| Saat Defensive Strategy |
Small Cap and Saat Defensive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Saat Defensive
The main advantage of trading using opposite Small Cap and Saat Defensive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Saat Defensive 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 Saat Defensive will offset losses from the drop in Saat Defensive's long position.| Small Cap vs. Growth Fund Of | Small Cap vs. Rbb Fund | Small Cap vs. Victory Incore Fund | Small Cap vs. T Rowe Price |
| Saat Defensive vs. Rbc Global Equity | Saat Defensive vs. Small Cap Equity | Saat Defensive vs. Greenspring Fund Retail | Saat Defensive vs. Smallcap World Fund |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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