Correlation Between Small Cap and PRIME
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By analyzing existing cross correlation between Small Cap Premium and PRIME SEC SVCS, you can compare the effects of market volatilities on Small Cap and PRIME 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 PRIME. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and PRIME.
Diversification Opportunities for Small Cap and PRIME
Very good diversification
The 3 months correlation between Small and PRIME is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Premium and PRIME SEC SVCS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PRIME SEC SVCS 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 PRIME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PRIME SEC SVCS has no effect on the direction of Small Cap i.e., Small Cap and PRIME go up and down completely randomly.
Pair Corralation between Small Cap and PRIME
Considering the 90-day investment horizon Small Cap Premium is expected to generate 0.52 times more return on investment than PRIME. However, Small Cap Premium is 1.93 times less risky than PRIME. It trades about 0.07 of its potential returns per unit of risk. PRIME SEC SVCS is currently generating about 0.02 per unit of risk. If you would invest 2,271 in Small Cap Premium on September 14, 2024 and sell it today you would earn a total of 186.00 from holding Small Cap Premium or generate 8.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 93.98% |
| Values | Daily Returns |
Small Cap Premium vs. PRIME SEC SVCS
Performance |
| Timeline |
| Small Cap Premium |
| PRIME SEC SVCS |
Small Cap and PRIME Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and PRIME
The main advantage of trading using opposite Small Cap and PRIME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, PRIME 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 PRIME will offset losses from the drop in PRIME'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 |
| PRIME vs. Ainsworth Game Technology | PRIME vs. Steven Madden | PRIME vs. Golden Matrix Group | PRIME vs. Victorias Secret Co |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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