Correlation Between Small Cap and Guidemark(r) Large
Can any of the company-specific risk be diversified away by investing in both Small Cap and Guidemark(r) Large 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 Guidemark(r) Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Growth Profund and Guidemark Large Cap, you can compare the effects of market volatilities on Small Cap and Guidemark(r) Large 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 Guidemark(r) Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Guidemark(r) Large.
Diversification Opportunities for Small Cap and Guidemark(r) Large
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Small and Guidemark(r) is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Growth Profund and Guidemark Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidemark Large Cap 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 Growth Profund are associated (or correlated) with Guidemark(r) Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidemark Large Cap has no effect on the direction of Small Cap i.e., Small Cap and Guidemark(r) Large go up and down completely randomly.
Pair Corralation between Small Cap and Guidemark(r) Large
Assuming the 90 days horizon Small Cap Growth Profund is expected to generate 1.13 times more return on investment than Guidemark(r) Large. However, Small Cap is 1.13 times more volatile than Guidemark Large Cap. It trades about 0.19 of its potential returns per unit of risk. Guidemark Large Cap is currently generating about 0.18 per unit of risk. If you would invest 10,988 in Small Cap Growth Profund on November 3, 2024 and sell it today you would earn a total of 410.00 from holding Small Cap Growth Profund or generate 3.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Growth Profund vs. Guidemark Large Cap
Performance |
| Timeline |
| Small Cap Growth |
| Guidemark Large Cap |
Small Cap and Guidemark(r) Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Guidemark(r) Large
The main advantage of trading using opposite Small Cap and Guidemark(r) Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Guidemark(r) Large 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 Guidemark(r) Large will offset losses from the drop in Guidemark(r) Large's long position.| Small Cap vs. Small Cap Value Profund | Small Cap vs. Mid Cap Growth Profund | Small Cap vs. Mid Cap Value Profund | Small Cap vs. Small Cap Profund Small Cap |
| Guidemark(r) Large vs. Nuveen Strategic Municipal | Guidemark(r) Large vs. Franklin Adjustable Government | Guidemark(r) Large vs. Goldman Sachs Short | Guidemark(r) Large vs. Federated Government 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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