Correlation Between Smallcap Fund and Small Cap
Can any of the company-specific risk be diversified away by investing in both Smallcap Fund and Small Cap 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 Small Cap 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 Small Cap Stock, you can compare the effects of market volatilities on Smallcap Fund and Small Cap 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 Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Fund and Small Cap.
Diversification Opportunities for Smallcap Fund and Small Cap
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Smallcap and Small is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Fund Fka and Small Cap Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Stock 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 Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Stock has no effect on the direction of Smallcap Fund i.e., Smallcap Fund and Small Cap go up and down completely randomly.
Pair Corralation between Smallcap Fund and Small Cap
Assuming the 90 days horizon Smallcap Fund Fka is expected to generate 1.04 times more return on investment than Small Cap. However, Smallcap Fund is 1.04 times more volatile than Small Cap Stock. It trades about 0.11 of its potential returns per unit of risk. Small Cap Stock is currently generating about -0.01 per unit of risk. If you would invest 2,494 in Smallcap Fund Fka on September 13, 2024 and sell it today you would earn a total of 27.00 from holding Smallcap Fund Fka or generate 1.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 52.38% |
| Values | Daily Returns |
Smallcap Fund Fka vs. Small Cap Stock
Performance |
| Timeline |
| Smallcap Fund Fka |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Small Cap Stock |
Smallcap Fund and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap Fund and Small Cap
The main advantage of trading using opposite Smallcap Fund and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap Fund position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| Smallcap Fund vs. Small Pany Growth | Smallcap Fund vs. Vy Baron Growth | Smallcap Fund vs. Pace Smallmedium Growth | Smallcap Fund vs. L Abbett Growth |
| Small Cap vs. Guggenheim Managed Futures | Small Cap vs. Simt Multi Asset Inflation | Small Cap vs. Goldman Sachs Inflation | Small Cap vs. Loomis Sayles Inflation |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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