Correlation Between International Equity and Small Pany
Can any of the company-specific risk be diversified away by investing in both International Equity and Small Pany 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 International Equity and Small Pany into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Equity Portfolio and Small Pany Growth, you can compare the effects of market volatilities on International Equity and Small Pany 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 International Equity with a short position of Small Pany. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Equity and Small Pany.
Diversification Opportunities for International Equity and Small Pany
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between International and Small is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding International Equity Portfolio 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 International Equity 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 International Equity Portfolio are associated (or correlated) with Small Pany. 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 International Equity i.e., International Equity and Small Pany go up and down completely randomly.
Pair Corralation between International Equity and Small Pany
Assuming the 90 days horizon International Equity Portfolio is expected to under-perform the Small Pany. But the mutual fund apears to be less risky and, when comparing its historical volatility, International Equity Portfolio is 2.13 times less risky than Small Pany. The mutual fund trades about -0.24 of its potential returns per unit of risk. The Small Pany Growth is currently generating about 0.53 of returns per unit of risk over similar time horizon. If you would invest 1,299 in Small Pany Growth on August 29, 2024 and sell it today you would earn a total of 351.00 from holding Small Pany Growth or generate 27.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Equity Portfolio vs. Small Pany Growth
Performance |
| Timeline |
| International Equity |
| Small Pany Growth |
International Equity and Small Pany Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Equity and Small Pany
The main advantage of trading using opposite International Equity and Small Pany positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Equity position performs unexpectedly, Small Pany 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 Pany will offset losses from the drop in Small Pany's long position.| International Equity vs. Emerging Markets Portfolio | International Equity vs. Growth Portfolio Class | International Equity vs. Small Pany Growth | International Equity vs. Mid Cap Growth |
| Small Pany vs. Putnam Equity Income | Small Pany vs. Putnam Growth Opportunities | Small Pany vs. HUMANA INC | Small Pany 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |