Correlation Between Jacob Small and Small Company
Can any of the company-specific risk be diversified away by investing in both Jacob Small and Small Company 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 Jacob Small and Small Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jacob Small Cap and Small Pany Growth, you can compare the effects of market volatilities on Jacob Small and Small Company 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 Jacob Small with a short position of Small Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacob Small and Small Company.
Diversification Opportunities for Jacob Small and Small Company
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Jacob and Small is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Jacob Small Cap and Small Pany Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Pany Growth and Jacob Small 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 Jacob Small Cap are associated (or correlated) with Small Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Pany Growth has no effect on the direction of Jacob Small i.e., Jacob Small and Small Company go up and down completely randomly.
Pair Corralation between Jacob Small and Small Company
Assuming the 90 days horizon Jacob Small is expected to generate 1.9 times less return on investment than Small Company. In addition to that, Jacob Small is 1.02 times more volatile than Small Pany Growth. It trades about 0.04 of its total potential returns per unit of risk. Small Pany Growth is currently generating about 0.09 per unit of volatility. If you would invest 834.00 in Small Pany Growth on August 29, 2024 and sell it today you would earn a total of 261.00 from holding Small Pany Growth or generate 31.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jacob Small Cap vs. Small Pany Growth
Performance |
| Timeline |
| Jacob Small Cap |
| Small Pany Growth |
Jacob Small and Small Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jacob Small and Small Company
The main advantage of trading using opposite Jacob Small and Small Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jacob Small position performs unexpectedly, Small Company 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 Company will offset losses from the drop in Small Company's long position.| Jacob Small vs. Putnam Equity Income | Jacob Small vs. Putnam Growth Opportunities | Jacob Small vs. HUMANA INC | Jacob Small vs. Aquagold International |
| Small Company vs. Mid Cap Growth | Small Company vs. Morgan Stanley Multi | Small Company vs. Growth Portfolio Class | Small Company vs. Amer Beacon Ark |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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