Correlation Between Fisher Investments and Small Cap

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Can any of the company-specific risk be diversified away by investing in both Fisher Investments and Small Cap 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 Fisher Investments and Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fisher Small Cap and Small Cap Growth, you can compare the effects of market volatilities on Fisher Investments and Small Cap 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 Fisher Investments with a short position of Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fisher Investments and Small Cap.

Diversification Opportunities for Fisher Investments and Small Cap

0.93
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Fisher and Small is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Fisher Small Cap and Small Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Growth and Fisher Investments 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 Fisher Small Cap are associated (or correlated) with Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Growth has no effect on the direction of Fisher Investments i.e., Fisher Investments and Small Cap go up and down completely randomly.

Pair Corralation between Fisher Investments and Small Cap

Assuming the 90 days horizon Fisher Small Cap is expected to generate 1.27 times more return on investment than Small Cap. However, Fisher Investments is 1.27 times more volatile than Small Cap Growth. It trades about 0.28 of its potential returns per unit of risk. Small Cap Growth is currently generating about 0.32 per unit of risk. If you would invest  1,228  in Fisher Small Cap on September 5, 2024 and sell it today you would earn a total of  129.00  from holding Fisher Small Cap or generate 10.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Fisher Small Cap  vs.  Small Cap Growth

 Performance 
       Timeline  
Fisher Investments 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Fisher Small Cap are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Fisher Investments showed solid returns over the last few months and may actually be approaching a breakup point.
Small Cap Growth 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Small Cap Growth are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Small Cap showed solid returns over the last few months and may actually be approaching a breakup point.

Fisher Investments and Small Cap Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fisher Investments and Small Cap

The main advantage of trading using opposite Fisher Investments and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fisher Investments position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.
The idea behind Fisher Small Cap and Small Cap Growth pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Transaction History module to view history of all your transactions and understand their impact on performance.

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