Correlation Between Smallcap Fund and Strategic Asset
Can any of the company-specific risk be diversified away by investing in both Smallcap Fund 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 Fund 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 Fund Fka and Strategic Asset Management, you can compare the effects of market volatilities on Smallcap Fund 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 Fund with a short position of Strategic Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Fund and Strategic Asset.
Diversification Opportunities for Smallcap Fund 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 Fund Fka 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 Fund 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 Fund Fka 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 Fund i.e., Smallcap Fund and Strategic Asset go up and down completely randomly.
Pair Corralation between Smallcap Fund and Strategic Asset
Assuming the 90 days horizon Smallcap Fund Fka is expected to under-perform the Strategic Asset. In addition to that, Smallcap Fund is 2.77 times more volatile than Strategic Asset Management. It trades about -0.07 of its total potential returns per unit of risk. Strategic Asset Management is currently generating about 0.1 per unit of volatility. If you would invest 1,749 in Strategic Asset Management on September 12, 2024 and sell it today you would earn a total of 12.00 from holding Strategic Asset Management or generate 0.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smallcap Fund Fka vs. Strategic Asset Management
Performance |
| Timeline |
| Smallcap Fund Fka |
| Strategic Asset Mana |
Smallcap Fund and Strategic Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap Fund and Strategic Asset
The main advantage of trading using opposite Smallcap Fund and Strategic Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap Fund 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 Fund vs. Sp Midcap Index | Smallcap Fund vs. Sp 500 Index | Smallcap Fund vs. Nasdaq 100 Index Fund | Smallcap Fund vs. Deutsche Sp 500 |
| Strategic Asset vs. 1919 Financial Services | Strategic Asset vs. Prudential Jennison Financial | Strategic Asset vs. Blackrock Financial Institutions | Strategic Asset vs. Davis Financial 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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