Correlation Between Small Cap and Sachem Capital
Can any of the company-specific risk be diversified away by investing in both Small Cap and Sachem Capital 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 Sachem Capital 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 Sachem Capital Corp, you can compare the effects of market volatilities on Small Cap and Sachem Capital 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 Sachem Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Sachem Capital.
Diversification Opportunities for Small Cap and Sachem Capital
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Small and Sachem is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Premium and Sachem Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sachem Capital Corp 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 Sachem Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sachem Capital Corp has no effect on the direction of Small Cap i.e., Small Cap and Sachem Capital go up and down completely randomly.
Pair Corralation between Small Cap and Sachem Capital
Considering the 90-day investment horizon Small Cap Premium is expected to generate 3.64 times more return on investment than Sachem Capital. However, Small Cap is 3.64 times more volatile than Sachem Capital Corp. It trades about 0.07 of its potential returns per unit of risk. Sachem Capital Corp is currently generating about 0.18 per unit of risk. If you would invest 2,399 in Small Cap Premium on August 28, 2024 and sell it today you would earn a total of 57.00 from holding Small Cap Premium or generate 2.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Premium vs. Sachem Capital Corp
Performance |
| Timeline |
| Small Cap Premium |
| Sachem Capital Corp |
Small Cap and Sachem Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Sachem Capital
The main advantage of trading using opposite Small Cap and Sachem Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Sachem Capital 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 Sachem Capital will offset losses from the drop in Sachem Capital's long position.| Small Cap vs. RiverNorth Specialty Finance | Small Cap vs. Royce Micro Cap | Small Cap vs. First Trust Enhanced | Small Cap vs. Voya Global Advantage |
| Sachem Capital vs. Sachem Capital Corp | Sachem Capital vs. Eagle Point Credit | Sachem Capital vs. B Riley Financial |
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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