Correlation Between Russell 2000 and Conestoga Smid
Can any of the company-specific risk be diversified away by investing in both Russell 2000 and Conestoga 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 Russell 2000 and Conestoga Smid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Russell 2000 2x and Conestoga Smid Cap, you can compare the effects of market volatilities on Russell 2000 and Conestoga 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 Russell 2000 with a short position of Conestoga Smid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Russell 2000 and Conestoga Smid.
Diversification Opportunities for Russell 2000 and Conestoga Smid
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Russell and Conestoga is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Russell 2000 2x and Conestoga Smid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conestoga Smid Cap and Russell 2000 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 Russell 2000 2x are associated (or correlated) with Conestoga Smid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conestoga Smid Cap has no effect on the direction of Russell 2000 i.e., Russell 2000 and Conestoga Smid go up and down completely randomly.
Pair Corralation between Russell 2000 and Conestoga Smid
Assuming the 90 days horizon Russell 2000 2x is expected to generate 2.69 times more return on investment than Conestoga Smid. However, Russell 2000 is 2.69 times more volatile than Conestoga Smid Cap. It trades about 0.31 of its potential returns per unit of risk. Conestoga Smid Cap is currently generating about 0.39 per unit of risk. If you would invest 16,556 in Russell 2000 2x on September 1, 2024 and sell it today you would earn a total of 3,616 from holding Russell 2000 2x or generate 21.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Russell 2000 2x vs. Conestoga Smid Cap
Performance |
| Timeline |
| Russell 2000 2x |
| Conestoga Smid Cap |
Russell 2000 and Conestoga Smid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Russell 2000 and Conestoga Smid
The main advantage of trading using opposite Russell 2000 and Conestoga Smid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Russell 2000 position performs unexpectedly, Conestoga 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 Conestoga Smid will offset losses from the drop in Conestoga Smid's long position.| Russell 2000 vs. Basic Materials Fund | Russell 2000 vs. Basic Materials Fund | Russell 2000 vs. Banking Fund Class | Russell 2000 vs. Basic Materials Fund |
| Conestoga Smid vs. Conestoga Small Cap | Conestoga Smid vs. Ycg Enhanced Fund | Conestoga Smid vs. Df Dent Premier | Conestoga Smid vs. Polen Growth 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 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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