Correlation Between Small Capitalization and Aggressive Balanced
Can any of the company-specific risk be diversified away by investing in both Small Capitalization and Aggressive Balanced 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 Capitalization and Aggressive Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Capitalization Portfolio and Aggressive Balanced Allocation, you can compare the effects of market volatilities on Small Capitalization and Aggressive Balanced 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 Capitalization with a short position of Aggressive Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Capitalization and Aggressive Balanced.
Diversification Opportunities for Small Capitalization and Aggressive Balanced
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Small and Aggressive is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Small Capitalization Portfolio and Aggressive Balanced Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aggressive Balanced and Small Capitalization 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 Capitalization Portfolio are associated (or correlated) with Aggressive Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aggressive Balanced has no effect on the direction of Small Capitalization i.e., Small Capitalization and Aggressive Balanced go up and down completely randomly.
Pair Corralation between Small Capitalization and Aggressive Balanced
Assuming the 90 days horizon Small Capitalization is expected to generate 1.19 times less return on investment than Aggressive Balanced. In addition to that, Small Capitalization is 2.13 times more volatile than Aggressive Balanced Allocation. It trades about 0.04 of its total potential returns per unit of risk. Aggressive Balanced Allocation is currently generating about 0.09 per unit of volatility. If you would invest 951.00 in Aggressive Balanced Allocation on August 29, 2024 and sell it today you would earn a total of 304.00 from holding Aggressive Balanced Allocation or generate 31.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Capitalization Portfolio vs. Aggressive Balanced Allocation
Performance |
| Timeline |
| Small Capitalization |
| Aggressive Balanced |
Small Capitalization and Aggressive Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Capitalization and Aggressive Balanced
The main advantage of trading using opposite Small Capitalization and Aggressive Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Capitalization position performs unexpectedly, Aggressive Balanced 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 Aggressive Balanced will offset losses from the drop in Aggressive Balanced's long position.| Small Capitalization vs. Rationalpier 88 Convertible | Small Capitalization vs. Mirova Global Green | Small Capitalization vs. Multisector Bond Sma | Small Capitalization vs. Ms Global Fixed |
| Aggressive Balanced vs. Salient Alternative Beta | Aggressive Balanced vs. Moderately Aggressive Balanced | Aggressive Balanced vs. Salient Mlp Fund | Aggressive Balanced vs. Moderately Aggressive Balanced |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |