Correlation Between Small Cap and 17298CHT8

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Can any of the company-specific risk be diversified away by investing in both Small Cap and 17298CHT8 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 17298CHT8 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 US17298CHT80, you can compare the effects of market volatilities on Small Cap and 17298CHT8 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 17298CHT8. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and 17298CHT8.

Diversification Opportunities for Small Cap and 17298CHT8

0.16
  Correlation Coefficient

Average diversification

The 3 months correlation between Small and 17298CHT8 is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Premium and US17298CHT80 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US17298CHT80 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 17298CHT8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US17298CHT80 has no effect on the direction of Small Cap i.e., Small Cap and 17298CHT8 go up and down completely randomly.

Pair Corralation between Small Cap and 17298CHT8

Considering the 90-day investment horizon Small Cap Premium is expected to generate 0.13 times more return on investment than 17298CHT8. However, Small Cap Premium is 7.94 times less risky than 17298CHT8. It trades about 0.13 of its potential returns per unit of risk. US17298CHT80 is currently generating about -0.07 per unit of risk. If you would invest  2,426  in Small Cap Premium on November 3, 2024 and sell it today you would earn a total of  17.37  from holding Small Cap Premium or generate 0.72% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy30.0%
ValuesDaily Returns

Small Cap Premium  vs.  US17298CHT80

 Performance 
       Timeline  
Small Cap Premium 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Small Cap Premium are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Small Cap is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.
US17298CHT80 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days US17298CHT80 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 17298CHT8 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Small Cap and 17298CHT8 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Small Cap and 17298CHT8

The main advantage of trading using opposite Small Cap and 17298CHT8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, 17298CHT8 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 17298CHT8 will offset losses from the drop in 17298CHT8's long position.
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The idea behind Small Cap Premium and US17298CHT80 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.

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