Correlation Between College Retirement and Small Cap
Can any of the company-specific risk be diversified away by investing in both College Retirement 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 College Retirement and Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between College Retirement Equities and Small Cap Growth, you can compare the effects of market volatilities on College Retirement 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 College Retirement with a short position of Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of College Retirement and Small Cap.
Diversification Opportunities for College Retirement and Small Cap
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between College and Small is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding College Retirement Equities and Small Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Growth and College Retirement 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 College Retirement Equities 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 Growth has no effect on the direction of College Retirement i.e., College Retirement and Small Cap go up and down completely randomly.
Pair Corralation between College Retirement and Small Cap
Assuming the 90 days trading horizon College Retirement Equities is expected to generate 0.52 times more return on investment than Small Cap. However, College Retirement Equities is 1.93 times less risky than Small Cap. It trades about 0.16 of its potential returns per unit of risk. Small Cap Growth is currently generating about 0.07 per unit of risk. If you would invest 51,462 in College Retirement Equities on September 13, 2024 and sell it today you would earn a total of 938.00 from holding College Retirement Equities or generate 1.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
College Retirement Equities vs. Small Cap Growth
Performance |
| Timeline |
| College Retirement |
| Small Cap Growth |
College Retirement and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with College Retirement and Small Cap
The main advantage of trading using opposite College Retirement and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if College Retirement 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.| College Retirement vs. Vanguard Total Stock | College Retirement vs. Vanguard 500 Index | College Retirement vs. Vanguard Total Stock | College Retirement vs. Vanguard Total Stock |
| Small Cap vs. Ab Global Real | Small Cap vs. Siit Global Managed | Small Cap vs. Dreyfusstandish Global Fixed | Small Cap vs. Franklin Mutual Global |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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