Correlation Between Massachusetts Investors and Small Cap
Can any of the company-specific risk be diversified away by investing in both Massachusetts Investors 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 Massachusetts Investors and Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Massachusetts Investors Growth and Small Cap Stock, you can compare the effects of market volatilities on Massachusetts Investors 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 Massachusetts Investors with a short position of Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Massachusetts Investors and Small Cap.
Diversification Opportunities for Massachusetts Investors and Small Cap
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Massachusetts and Small is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Massachusetts Investors Growth and Small Cap Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Stock and Massachusetts Investors 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 Massachusetts Investors Growth 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 Stock has no effect on the direction of Massachusetts Investors i.e., Massachusetts Investors and Small Cap go up and down completely randomly.
Pair Corralation between Massachusetts Investors and Small Cap
Assuming the 90 days horizon Massachusetts Investors is expected to generate 1.2 times less return on investment than Small Cap. But when comparing it to its historical volatility, Massachusetts Investors Growth is 1.63 times less risky than Small Cap. It trades about 0.1 of its potential returns per unit of risk. Small Cap Stock is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,191 in Small Cap Stock on September 14, 2024 and sell it today you would earn a total of 295.00 from holding Small Cap Stock or generate 24.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Massachusetts Investors Growth vs. Small Cap Stock
Performance |
| Timeline |
| Massachusetts Investors |
| Small Cap Stock |
Massachusetts Investors and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Massachusetts Investors and Small Cap
The main advantage of trading using opposite Massachusetts Investors and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Massachusetts Investors 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.| Massachusetts Investors vs. Small Cap Stock | Massachusetts Investors vs. Blackrock Sm Cap | Massachusetts Investors vs. Tiaa Cref Small Cap Blend | Massachusetts Investors vs. Adams Diversified Equity |
| Small Cap vs. Guggenheim Managed Futures | Small Cap vs. Simt Multi Asset Inflation | Small Cap vs. Goldman Sachs Inflation | Small Cap vs. Loomis Sayles Inflation |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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