Correlation Between Smallcap Value and Strategic Asset
Can any of the company-specific risk be diversified away by investing in both Smallcap Value 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 Value 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 Value Fund and Strategic Asset Management, you can compare the effects of market volatilities on Smallcap Value 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 Value with a short position of Strategic Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Value and Strategic Asset.
Diversification Opportunities for Smallcap Value and Strategic Asset
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Smallcap and Strategic is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Value 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 Value 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 Value 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 Value i.e., Smallcap Value and Strategic Asset go up and down completely randomly.
Pair Corralation between Smallcap Value and Strategic Asset
Assuming the 90 days horizon Smallcap Value Fund is expected to generate 2.47 times more return on investment than Strategic Asset. However, Smallcap Value is 2.47 times more volatile than Strategic Asset Management. It trades about 0.06 of its potential returns per unit of risk. Strategic Asset Management is currently generating about 0.14 per unit of risk. If you would invest 1,117 in Smallcap Value Fund on September 3, 2024 and sell it today you would earn a total of 176.00 from holding Smallcap Value Fund or generate 15.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smallcap Value Fund vs. Strategic Asset Management
Performance |
| Timeline |
| Smallcap Value |
| Strategic Asset Mana |
Smallcap Value and Strategic Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap Value and Strategic Asset
The main advantage of trading using opposite Smallcap Value and Strategic Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap Value 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 Value vs. Blackrock Science Technology | Smallcap Value vs. Towpath Technology | Smallcap Value vs. Science Technology Fund | Smallcap Value vs. Firsthand Technology Opportunities |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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