Correlation Between Ab Small and Small Cap
Can any of the company-specific risk be diversified away by investing in both Ab Small and Small Cap 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 Ab Small and Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Small Cap and Small Cap Core, you can compare the effects of market volatilities on Ab Small and Small Cap 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 Ab Small with a short position of Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Small and Small Cap.
Diversification Opportunities for Ab Small and Small Cap
Almost no diversification
The 3 months correlation between SCCVX and Small is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Ab Small Cap and Small Cap Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Core and Ab Small 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 Ab Small Cap are associated (or correlated) with Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Core has no effect on the direction of Ab Small i.e., Ab Small and Small Cap go up and down completely randomly.
Pair Corralation between Ab Small and Small Cap
Assuming the 90 days horizon Ab Small Cap is expected to generate 0.93 times more return on investment than Small Cap. However, Ab Small Cap is 1.07 times less risky than Small Cap. It trades about 0.16 of its potential returns per unit of risk. Small Cap Core is currently generating about 0.13 per unit of risk. If you would invest 1,384 in Ab Small Cap on August 24, 2024 and sell it today you would earn a total of 73.00 from holding Ab Small Cap or generate 5.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Small Cap vs. Small Cap Core
Performance |
| Timeline |
| Ab Small Cap |
| Small Cap Core |
Ab Small and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Small and Small Cap
The main advantage of trading using opposite Ab Small and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Small position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| Ab Small vs. Virtus Seix Government | Ab Small vs. John Hancock Government | Ab Small vs. Fidelity Series Government | Ab Small vs. Prudential Government Income |
| Small Cap vs. Vanguard Mid Cap Index | Small Cap vs. Vanguard Total Bond | Small Cap vs. Vanguard Institutional Index | Small Cap vs. Vanguard Total International |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |