Correlation Between Smallcap Growth and Strategic Asset
Can any of the company-specific risk be diversified away by investing in both Smallcap Growth and Strategic Asset 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 Strategic Asset 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 Strategic Asset Management, you can compare the effects of market volatilities on Smallcap Growth and Strategic Asset 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 Strategic Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Growth and Strategic Asset.
Diversification Opportunities for Smallcap Growth and Strategic Asset
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Smallcap and Strategic is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Growth Fund and Strategic Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Asset Mana 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 Strategic Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Asset Mana has no effect on the direction of Smallcap Growth i.e., Smallcap Growth and Strategic Asset go up and down completely randomly.
Pair Corralation between Smallcap Growth and Strategic Asset
Assuming the 90 days horizon Smallcap Growth Fund is expected to generate 2.7 times more return on investment than Strategic Asset. However, Smallcap Growth is 2.7 times more volatile than Strategic Asset Management. It trades about 0.28 of its potential returns per unit of risk. Strategic Asset Management is currently generating about 0.39 per unit of risk. If you would invest 1,588 in Smallcap Growth Fund on September 2, 2024 and sell it today you would earn a total of 141.00 from holding Smallcap Growth Fund or generate 8.88% 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. Strategic Asset Management
Performance |
| Timeline |
| Smallcap Growth |
| Strategic Asset Mana |
Smallcap Growth and Strategic Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap Growth and Strategic Asset
The main advantage of trading using opposite Smallcap Growth and Strategic Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap Growth position performs unexpectedly, Strategic Asset 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 Strategic Asset will offset losses from the drop in Strategic Asset's long position.| Smallcap Growth vs. Gmo High Yield | Smallcap Growth vs. Prudential Short Duration | Smallcap Growth vs. Artisan High Income | Smallcap Growth vs. Dunham High Yield |
| Strategic Asset vs. Artisan Emerging Markets | Strategic Asset vs. Ep Emerging Markets | Strategic Asset vs. Ab All Market | Strategic Asset vs. Doubleline Emerging Markets |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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