Correlation Between Smallcap and Strategic Asset
Can any of the company-specific risk be diversified away by investing in both Smallcap 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 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 Sp 600 and Strategic Asset Management, you can compare the effects of market volatilities on Smallcap 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 with a short position of Strategic Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap and Strategic Asset.
Diversification Opportunities for Smallcap and Strategic Asset
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Smallcap and Strategic is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Sp 600 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 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 Sp 600 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 i.e., Smallcap and Strategic Asset go up and down completely randomly.
Pair Corralation between Smallcap and Strategic Asset
Assuming the 90 days horizon Smallcap Sp 600 is expected to under-perform the Strategic Asset. In addition to that, Smallcap is 3.01 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 | Weak |
| Accuracy | 57.14% |
| Values | Daily Returns |
Smallcap Sp 600 vs. Strategic Asset Management
Performance |
| Timeline |
| Smallcap Sp 600 |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Strategic Asset Mana |
Smallcap and Strategic Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap and Strategic Asset
The main advantage of trading using opposite Smallcap and Strategic Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap 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 vs. Multisector Bond Sma | Smallcap vs. Versatile Bond Portfolio | Smallcap vs. Artisan High Income | Smallcap vs. Touchstone Premium Yield |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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