Correlation Between Small Cap and Abbey Capital
Can any of the company-specific risk be diversified away by investing in both Small Cap and Abbey Capital 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 Abbey Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Value and Abbey Capital Futures, you can compare the effects of market volatilities on Small Cap and Abbey Capital 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 Abbey Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Abbey Capital.
Diversification Opportunities for Small Cap and Abbey Capital
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between SMALL and Abbey is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Value and Abbey Capital Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abbey Capital Futures 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 Value are associated (or correlated) with Abbey Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abbey Capital Futures has no effect on the direction of Small Cap i.e., Small Cap and Abbey Capital go up and down completely randomly.
Pair Corralation between Small Cap and Abbey Capital
Assuming the 90 days horizon Small Cap Value is expected to generate 2.46 times more return on investment than Abbey Capital. However, Small Cap is 2.46 times more volatile than Abbey Capital Futures. It trades about 0.04 of its potential returns per unit of risk. Abbey Capital Futures is currently generating about -0.01 per unit of risk. If you would invest 1,573 in Small Cap Value on August 25, 2024 and sell it today you would earn a total of 378.00 from holding Small Cap Value or generate 24.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Value vs. Abbey Capital Futures
Performance |
| Timeline |
| Small Cap Value |
| Abbey Capital Futures |
Small Cap and Abbey Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Abbey Capital
The main advantage of trading using opposite Small Cap and Abbey Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Abbey Capital 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 Abbey Capital will offset losses from the drop in Abbey Capital's long position.| Small Cap vs. Regional Bank Fund | Small Cap vs. Regional Bank Fund | Small Cap vs. Multimanager Lifestyle Moderate | Small Cap vs. Multimanager Lifestyle Balanced |
| Abbey Capital vs. Small Cap Value | Abbey Capital vs. Small Pany Growth | Abbey Capital vs. Massmutual Select Small | Abbey Capital vs. Ab Small Cap |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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