Correlation Between Mutual Of and Small Cap
Can any of the company-specific risk be diversified away by investing in both Mutual Of 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 Mutual Of and Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mutual Of America and Small Cap Equity, you can compare the effects of market volatilities on Mutual Of 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 Mutual Of with a short position of Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mutual Of and Small Cap.
Diversification Opportunities for Mutual Of and Small Cap
Almost no diversification
The 3 months correlation between Mutual and Small is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Mutual Of America and Small Cap Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Equity and Mutual Of 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 Mutual Of America 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 Equity has no effect on the direction of Mutual Of i.e., Mutual Of and Small Cap go up and down completely randomly.
Pair Corralation between Mutual Of and Small Cap
Assuming the 90 days horizon Mutual Of is expected to generate 1.79 times less return on investment than Small Cap. But when comparing it to its historical volatility, Mutual Of America is 1.77 times less risky than Small Cap. It trades about 0.15 of its potential returns per unit of risk. Small Cap Equity is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,865 in Small Cap Equity on August 30, 2024 and sell it today you would earn a total of 166.00 from holding Small Cap Equity or generate 8.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mutual Of America vs. Small Cap Equity
Performance |
| Timeline |
| Mutual Of America |
| Small Cap Equity |
Mutual Of and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mutual Of and Small Cap
The main advantage of trading using opposite Mutual Of and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mutual Of 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.| Mutual Of vs. Small Cap Equity | Mutual Of vs. Vanguard Equity Income | Mutual Of vs. Artisan Select Equity | Mutual Of vs. Gmo Global Equity |
| Small Cap vs. Growth Allocation Fund | Small Cap vs. Defensive Market Strategies | Small Cap vs. Defensive Market Strategies | Small Cap vs. Value Equity Institutional |
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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