Correlation Between Cohen Steers and Small Cap
Can any of the company-specific risk be diversified away by investing in both Cohen Steers 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 Cohen Steers and Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cohen Steers Real and Small Cap Stock, you can compare the effects of market volatilities on Cohen Steers 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 Cohen Steers with a short position of Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cohen Steers and Small Cap.
Diversification Opportunities for Cohen Steers and Small Cap
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cohen and Small is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Cohen Steers Real 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 Cohen Steers 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 Cohen Steers Real 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 Cohen Steers i.e., Cohen Steers and Small Cap go up and down completely randomly.
Pair Corralation between Cohen Steers and Small Cap
Assuming the 90 days horizon Cohen Steers is expected to generate 8.11 times less return on investment than Small Cap. But when comparing it to its historical volatility, Cohen Steers Real is 3.06 times less risky than Small Cap. It trades about 0.1 of its potential returns per unit of risk. Small Cap Stock is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 1,391 in Small Cap Stock on September 1, 2024 and sell it today you would earn a total of 134.00 from holding Small Cap Stock or generate 9.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cohen Steers Real vs. Small Cap Stock
Performance |
| Timeline |
| Cohen Steers Real |
| Small Cap Stock |
Cohen Steers and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cohen Steers and Small Cap
The main advantage of trading using opposite Cohen Steers and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cohen Steers 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.| Cohen Steers vs. Small Cap Stock | Cohen Steers vs. Auer Growth Fund | Cohen Steers vs. Artisan Thematic Fund | Cohen Steers vs. T Rowe Price |
| Small Cap vs. Western Asset High | Small Cap vs. Needham Aggressive Growth | Small Cap vs. T Rowe Price | Small Cap vs. California High Yield Municipal |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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