Correlation Between Paradigm Select and Zacks Small-cap
Can any of the company-specific risk be diversified away by investing in both Paradigm Select and Zacks 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 Paradigm Select and Zacks Small-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Paradigm Select Fund and Zacks Small Cap E, you can compare the effects of market volatilities on Paradigm Select and Zacks 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 Paradigm Select with a short position of Zacks Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paradigm Select and Zacks Small-cap.
Diversification Opportunities for Paradigm Select and Zacks Small-cap
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Paradigm and Zacks is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Paradigm Select Fund and Zacks Small Cap E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zacks Small Cap and Paradigm Select 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 Paradigm Select Fund are associated (or correlated) with Zacks 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 Zacks Small Cap has no effect on the direction of Paradigm Select i.e., Paradigm Select and Zacks Small-cap go up and down completely randomly.
Pair Corralation between Paradigm Select and Zacks Small-cap
Assuming the 90 days horizon Paradigm Select Fund is expected to generate 0.66 times more return on investment than Zacks Small-cap. However, Paradigm Select Fund is 1.51 times less risky than Zacks Small-cap. It trades about 0.28 of its potential returns per unit of risk. Zacks Small Cap E is currently generating about 0.18 per unit of risk. If you would invest 7,838 in Paradigm Select Fund on August 26, 2024 and sell it today you would earn a total of 570.00 from holding Paradigm Select Fund or generate 7.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Paradigm Select Fund vs. Zacks Small Cap E
Performance |
| Timeline |
| Paradigm Select |
| Zacks Small Cap |
Paradigm Select and Zacks Small-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Paradigm Select and Zacks Small-cap
The main advantage of trading using opposite Paradigm Select and Zacks Small-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paradigm Select position performs unexpectedly, Zacks 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 Zacks Small-cap will offset losses from the drop in Zacks Small-cap's long position.| Paradigm Select vs. Paradigm Micro Cap Fund | Paradigm Select vs. Paradigm Value Fund | Paradigm Select vs. Needham Small Cap | Paradigm Select vs. Touchstone Mid Cap |
| Zacks Small-cap vs. Zacks Small Cap E | Zacks Small-cap vs. Needham Aggressive Growth | Zacks Small-cap vs. Towle Deep Value | Zacks Small-cap vs. Prudential Qma Small Cap |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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