Correlation Between Smallcap World and Smallcap World
Can any of the company-specific risk be diversified away by investing in both Smallcap World and Smallcap World 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 Smallcap World and Smallcap World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smallcap World Fund and Smallcap World Fund, you can compare the effects of market volatilities on Smallcap World and Smallcap World 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 Smallcap World with a short position of Smallcap World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap World and Smallcap World.
Diversification Opportunities for Smallcap World and Smallcap World
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SMALLCAP and Smallcap is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap World Fund and Smallcap World Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smallcap World and Smallcap World 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 Smallcap World Fund are associated (or correlated) with Smallcap World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smallcap World has no effect on the direction of Smallcap World i.e., Smallcap World and Smallcap World go up and down completely randomly.
Pair Corralation between Smallcap World and Smallcap World
Assuming the 90 days horizon Smallcap World is expected to generate 1.19 times less return on investment than Smallcap World. But when comparing it to its historical volatility, Smallcap World Fund is 1.01 times less risky than Smallcap World. It trades about 0.21 of its potential returns per unit of risk. Smallcap World Fund is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 6,742 in Smallcap World Fund on September 1, 2024 and sell it today you would earn a total of 311.00 from holding Smallcap World Fund or generate 4.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smallcap World Fund vs. Smallcap World Fund
Performance |
| Timeline |
| Smallcap World |
| Smallcap World |
Smallcap World and Smallcap World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap World and Smallcap World
The main advantage of trading using opposite Smallcap World and Smallcap World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap World position performs unexpectedly, Smallcap World 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 Smallcap World will offset losses from the drop in Smallcap World's long position.| Smallcap World vs. American Funds Fundamental | Smallcap World vs. Amcap Fund Class | Smallcap World vs. New World Fund | Smallcap World vs. Washington Mutual Investors |
| Smallcap World vs. New World Fund | Smallcap World vs. Washington Mutual Investors | Smallcap World vs. Europacific Growth Fund | Smallcap World vs. New Perspective Fund |
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 Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |