Correlation Between Smallcap Growth and Optimum Large
Can any of the company-specific risk be diversified away by investing in both Smallcap Growth and Optimum Large 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 Optimum Large 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 Optimum Large Cap, you can compare the effects of market volatilities on Smallcap Growth and Optimum Large 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 Optimum Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Growth and Optimum Large.
Diversification Opportunities for Smallcap Growth and Optimum Large
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Smallcap and Optimum is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Growth Fund and Optimum Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimum Large 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 Optimum Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimum Large Cap has no effect on the direction of Smallcap Growth i.e., Smallcap Growth and Optimum Large go up and down completely randomly.
Pair Corralation between Smallcap Growth and Optimum Large
Assuming the 90 days horizon Smallcap Growth Fund is expected to generate 1.22 times more return on investment than Optimum Large. However, Smallcap Growth is 1.22 times more volatile than Optimum Large Cap. It trades about 0.07 of its potential returns per unit of risk. Optimum Large Cap is currently generating about 0.02 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 Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smallcap Growth Fund vs. Optimum Large Cap
Performance |
| Timeline |
| Smallcap Growth |
| Optimum Large Cap |
Smallcap Growth and Optimum Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap Growth and Optimum Large
The main advantage of trading using opposite Smallcap Growth and Optimum Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap Growth position performs unexpectedly, Optimum Large 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 Optimum Large will offset losses from the drop in Optimum Large'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 |
| Optimum Large vs. Ftfa Franklin Templeton Growth | Optimum Large vs. T Rowe Price | Optimum Large vs. Tfa Alphagen Growth | Optimum Large vs. Smallcap Growth Fund |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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