Correlation Between Smallcap Growth and Global E
Can any of the company-specific risk be diversified away by investing in both Smallcap Growth and Global E 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 Global E 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 Global E Portfolio, you can compare the effects of market volatilities on Smallcap Growth and Global E 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 Global E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Growth and Global E.
Diversification Opportunities for Smallcap Growth and Global E
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Smallcap and Global is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Growth Fund and Global E Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global E Portfolio 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 Global E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global E Portfolio has no effect on the direction of Smallcap Growth i.e., Smallcap Growth and Global E go up and down completely randomly.
Pair Corralation between Smallcap Growth and Global E
Assuming the 90 days horizon Smallcap Growth is expected to generate 1.18 times less return on investment than Global E. In addition to that, Smallcap Growth is 1.33 times more volatile than Global E Portfolio. It trades about 0.06 of its total potential returns per unit of risk. Global E Portfolio is currently generating about 0.1 per unit of volatility. If you would invest 1,433 in Global E Portfolio on September 14, 2024 and sell it today you would earn a total of 761.00 from holding Global E Portfolio or generate 53.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smallcap Growth Fund vs. Global E Portfolio
Performance |
| Timeline |
| Smallcap Growth |
| Global E Portfolio |
Smallcap Growth and Global E Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap Growth and Global E
The main advantage of trading using opposite Smallcap Growth and Global E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap Growth position performs unexpectedly, Global E 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 Global E will offset losses from the drop in Global E's long position.| Smallcap Growth vs. Eip Growth And | Smallcap Growth vs. Franklin Growth Opportunities | Smallcap Growth vs. Rational Defensive Growth | Smallcap Growth vs. Praxis Growth Index |
| Global E vs. Global Advantage Portfolio | Global E vs. Ridgeworth Innovative Growth | Global E vs. Transamerica Capital Growth | Global E vs. Internet Ultrasector Profund |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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