Correlation Between Rmb International and Rmb Smid
Can any of the company-specific risk be diversified away by investing in both Rmb International and Rmb Smid 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 Rmb International and Rmb Smid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rmb International Fund and Rmb Smid Cap, you can compare the effects of market volatilities on Rmb International and Rmb Smid 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 Rmb International with a short position of Rmb Smid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rmb International and Rmb Smid.
Diversification Opportunities for Rmb International and Rmb Smid
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Rmb and Rmb is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Rmb International Fund and Rmb Smid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rmb Smid Cap and Rmb International 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 Rmb International Fund are associated (or correlated) with Rmb Smid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rmb Smid Cap has no effect on the direction of Rmb International i.e., Rmb International and Rmb Smid go up and down completely randomly.
Pair Corralation between Rmb International and Rmb Smid
Assuming the 90 days horizon Rmb International Fund is expected to under-perform the Rmb Smid. But the mutual fund apears to be less risky and, when comparing its historical volatility, Rmb International Fund is 1.63 times less risky than Rmb Smid. The mutual fund trades about -0.29 of its potential returns per unit of risk. The Rmb Smid Cap is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,374 in Rmb Smid Cap on August 26, 2024 and sell it today you would earn a total of 101.00 from holding Rmb Smid Cap or generate 7.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rmb International Fund vs. Rmb Smid Cap
Performance |
| Timeline |
| Rmb International |
| Rmb Smid Cap |
Rmb International and Rmb Smid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rmb International and Rmb Smid
The main advantage of trading using opposite Rmb International and Rmb Smid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rmb International position performs unexpectedly, Rmb Smid 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 Rmb Smid will offset losses from the drop in Rmb Smid's long position.| Rmb International vs. Rmb Small Cap | Rmb International vs. Rmb Fund A | Rmb International vs. Rmb Fund I | Rmb International vs. Rmb Fund C |
| Rmb Smid vs. Rmb Small Cap | Rmb Smid vs. Rmb Fund I | Rmb Smid vs. Rmb Mendon Financial | Rmb Smid vs. Rmb Mendon 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |