Correlation Between Small Cap and Agora
Can any of the company-specific risk be diversified away by investing in both Small Cap and Agora 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 Small Cap and Agora into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Core and Agora Inc, you can compare the effects of market volatilities on Small Cap and Agora 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 Agora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Agora.
Diversification Opportunities for Small Cap and Agora
Poor diversification
The 3 months correlation between Small and Agora is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Core and Agora Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agora Inc 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 Core are associated (or correlated) with Agora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agora Inc has no effect on the direction of Small Cap i.e., Small Cap and Agora go up and down completely randomly.
Pair Corralation between Small Cap and Agora
Assuming the 90 days horizon Small Cap is expected to generate 9.0 times less return on investment than Agora. But when comparing it to its historical volatility, Small Cap Core is 7.12 times less risky than Agora. It trades about 0.19 of its potential returns per unit of risk. Agora Inc is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 298.00 in Agora Inc on August 27, 2024 and sell it today you would earn a total of 178.00 from holding Agora Inc or generate 59.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Core vs. Agora Inc
Performance |
| Timeline |
| Small Cap Core |
| Agora Inc |
Small Cap and Agora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Agora
The main advantage of trading using opposite Small Cap and Agora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Agora 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 Agora will offset losses from the drop in Agora's long position.| Small Cap vs. Pro Blend Moderate Term | Small Cap vs. Hartford Moderate Allocation | Small Cap vs. Qs Moderate Growth | Small Cap vs. Dimensional Retirement Income |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |