Correlation Between Smallcap Growth and International Equity
Can any of the company-specific risk be diversified away by investing in both Smallcap Growth and International Equity 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 International Equity 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 International Equity Institutional, you can compare the effects of market volatilities on Smallcap Growth and International Equity 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 International Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Growth and International Equity.
Diversification Opportunities for Smallcap Growth and International Equity
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Smallcap and International is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Growth Fund and International Equity Instituti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Equity 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 International Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Equity has no effect on the direction of Smallcap Growth i.e., Smallcap Growth and International Equity go up and down completely randomly.
Pair Corralation between Smallcap Growth and International Equity
Assuming the 90 days horizon Smallcap Growth Fund is expected to generate 1.46 times more return on investment than International Equity. However, Smallcap Growth is 1.46 times more volatile than International Equity Institutional. It trades about 0.07 of its potential returns per unit of risk. International Equity Institutional is currently generating about 0.04 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smallcap Growth Fund vs. International Equity Instituti
Performance |
| Timeline |
| Smallcap Growth |
| International Equity |
Smallcap Growth and International Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap Growth and International Equity
The main advantage of trading using opposite Smallcap Growth and International Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap Growth position performs unexpectedly, International Equity 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 International Equity will offset losses from the drop in International Equity'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 |
| International Equity vs. Smallcap Growth Fund | International Equity vs. Qs Growth Fund | International Equity vs. L Abbett Growth | International Equity vs. Small Pany Growth |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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