Correlation Between Smallcap Growth and Cardinal Small
Can any of the company-specific risk be diversified away by investing in both Smallcap Growth and Cardinal Small 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 Smallcap Growth and Cardinal Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smallcap Growth Fund and Cardinal Small Cap, you can compare the effects of market volatilities on Smallcap Growth and Cardinal Small 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 Smallcap Growth with a short position of Cardinal Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Growth and Cardinal Small.
Diversification Opportunities for Smallcap Growth and Cardinal Small
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Smallcap and Cardinal is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Growth Fund and Cardinal Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Small Cap and Smallcap Growth 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 Smallcap Growth Fund are associated (or correlated) with Cardinal Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Small Cap has no effect on the direction of Smallcap Growth i.e., Smallcap Growth and Cardinal Small go up and down completely randomly.
Pair Corralation between Smallcap Growth and Cardinal Small
Assuming the 90 days horizon Smallcap Growth Fund is expected to generate 1.21 times more return on investment than Cardinal Small. However, Smallcap Growth is 1.21 times more volatile than Cardinal Small Cap. It trades about 0.07 of its potential returns per unit of risk. Cardinal Small Cap is currently generating about 0.06 per unit of risk. If you would invest 1,311 in Smallcap Growth Fund on September 12, 2024 and sell it today you would earn a total of 385.00 from holding Smallcap Growth Fund or generate 29.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smallcap Growth Fund vs. Cardinal Small Cap
Performance |
| Timeline |
| Smallcap Growth |
| Cardinal Small Cap |
Smallcap Growth and Cardinal Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap Growth and Cardinal Small
The main advantage of trading using opposite Smallcap Growth and Cardinal Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap Growth position performs unexpectedly, Cardinal Small 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 Cardinal Small will offset losses from the drop in Cardinal Small's long position.| Smallcap Growth vs. Allianzgi Diversified Income | Smallcap Growth vs. Global Diversified Income | Smallcap Growth vs. Aqr Diversified Arbitrage | Smallcap Growth vs. Guggenheim Diversified Income |
| Cardinal Small vs. Jennison Natural Resources | Cardinal Small vs. Tortoise Energy Independence | Cardinal Small vs. Gamco Natural Resources | Cardinal Small vs. Fidelity Advisor Energy |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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