Correlation Between Small Cap and Malaga Financial
Can any of the company-specific risk be diversified away by investing in both Small Cap and Malaga Financial 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 Malaga Financial 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 Malaga Financial, you can compare the effects of market volatilities on Small Cap and Malaga Financial 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 Malaga Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Malaga Financial.
Diversification Opportunities for Small Cap and Malaga Financial
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Small and Malaga is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Core and Malaga Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malaga Financial 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 Malaga Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malaga Financial has no effect on the direction of Small Cap i.e., Small Cap and Malaga Financial go up and down completely randomly.
Pair Corralation between Small Cap and Malaga Financial
Assuming the 90 days horizon Small Cap is expected to generate 1.93 times less return on investment than Malaga Financial. But when comparing it to its historical volatility, Small Cap Core is 3.27 times less risky than Malaga Financial. It trades about 0.05 of its potential returns per unit of risk. Malaga Financial is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,033 in Malaga Financial on August 23, 2024 and sell it today you would earn a total of 242.00 from holding Malaga Financial or generate 11.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 81.85% |
| Values | Daily Returns |
Small Cap Core vs. Malaga Financial
Performance |
| Timeline |
| Small Cap Core |
| Malaga Financial |
Small Cap and Malaga Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Malaga Financial
The main advantage of trading using opposite Small Cap and Malaga Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Malaga Financial 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 Malaga Financial will offset losses from the drop in Malaga Financial's long position.| 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 |
| Malaga Financial vs. Pioneer Floating Rate | Malaga Financial vs. The Gabelli Equity | Malaga Financial vs. Pioneer Municipal High | Malaga Financial vs. Nuveen Global High |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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