Correlation Between Jacob Small and Jacob Micro
Can any of the company-specific risk be diversified away by investing in both Jacob Small and Jacob Micro 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 Jacob Micro 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 Jacob Micro Cap, you can compare the effects of market volatilities on Jacob Small and Jacob Micro 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 Jacob Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacob Small and Jacob Micro.
Diversification Opportunities for Jacob Small and Jacob Micro
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Jacob and Jacob is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Jacob Small Cap and Jacob Micro Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacob Micro Cap 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 Jacob Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacob Micro Cap has no effect on the direction of Jacob Small i.e., Jacob Small and Jacob Micro go up and down completely randomly.
Pair Corralation between Jacob Small and Jacob Micro
Assuming the 90 days horizon Jacob Small Cap is expected to generate 1.37 times more return on investment than Jacob Micro. However, Jacob Small is 1.37 times more volatile than Jacob Micro Cap. It trades about 0.06 of its potential returns per unit of risk. Jacob Micro Cap is currently generating about 0.05 per unit of risk. If you would invest 1,655 in Jacob Small Cap on August 29, 2024 and sell it today you would earn a total of 568.00 from holding Jacob Small Cap or generate 34.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jacob Small Cap vs. Jacob Micro Cap
Performance |
| Timeline |
| Jacob Small Cap |
| Jacob Micro Cap |
Jacob Small and Jacob Micro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jacob Small and Jacob Micro
The main advantage of trading using opposite Jacob Small and Jacob Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jacob Small position performs unexpectedly, Jacob Micro 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 Jacob Micro will offset losses from the drop in Jacob Micro's long position.| Jacob Small vs. Jacob Internet Fund | Jacob Small vs. Jacob Small Cap | Jacob Small vs. Jacob Micro Cap | Jacob Small vs. Prudential Jennison International |
| Jacob Micro vs. Putnam Equity Income | Jacob Micro vs. Putnam Growth Opportunities | Jacob Micro vs. HUMANA INC | Jacob Micro vs. Aquagold International |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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