Correlation Between Small Cap and Almacenes Xito
Can any of the company-specific risk be diversified away by investing in both Small Cap and Almacenes Xito 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 Small Cap and Almacenes Xito into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Premium and Almacenes xito SA, you can compare the effects of market volatilities on Small Cap and Almacenes Xito 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 Small Cap with a short position of Almacenes Xito. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Almacenes Xito.
Diversification Opportunities for Small Cap and Almacenes Xito
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Small and Almacenes is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Premium and Almacenes xito SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Almacenes xito SA and Small Cap 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 Small Cap Premium are associated (or correlated) with Almacenes Xito. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Almacenes xito SA has no effect on the direction of Small Cap i.e., Small Cap and Almacenes Xito go up and down completely randomly.
Pair Corralation between Small Cap and Almacenes Xito
Considering the 90-day investment horizon Small Cap Premium is expected to generate 0.28 times more return on investment than Almacenes Xito. However, Small Cap Premium is 3.61 times less risky than Almacenes Xito. It trades about -0.03 of its potential returns per unit of risk. Almacenes xito SA is currently generating about -0.13 per unit of risk. If you would invest 2,458 in Small Cap Premium on September 12, 2024 and sell it today you would lose (6.00) from holding Small Cap Premium or give up 0.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Premium vs. Almacenes xito SA
Performance |
| Timeline |
| Small Cap Premium |
| Almacenes xito SA |
Small Cap and Almacenes Xito Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Almacenes Xito
The main advantage of trading using opposite Small Cap and Almacenes Xito positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Almacenes Xito 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 Almacenes Xito will offset losses from the drop in Almacenes Xito's long position.| Small Cap vs. RiverNorth Specialty Finance | Small Cap vs. Royce Micro Cap | Small Cap vs. Voya Global Advantage | Small Cap vs. Ready Capital |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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