Correlation Between Small-cap Value and Rising Rates
Can any of the company-specific risk be diversified away by investing in both Small-cap Value and Rising Rates 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 Value and Rising Rates into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Value Profund and Rising Rates Opportunity, you can compare the effects of market volatilities on Small-cap Value and Rising Rates 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 Value with a short position of Rising Rates. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small-cap Value and Rising Rates.
Diversification Opportunities for Small-cap Value and Rising Rates
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Small-cap and Rising is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Value Profund and Rising Rates Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rising Rates Opportunity and Small-cap Value 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 Value Profund are associated (or correlated) with Rising Rates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rising Rates Opportunity has no effect on the direction of Small-cap Value i.e., Small-cap Value and Rising Rates go up and down completely randomly.
Pair Corralation between Small-cap Value and Rising Rates
Assuming the 90 days horizon Small Cap Value Profund is expected to generate 1.51 times more return on investment than Rising Rates. However, Small-cap Value is 1.51 times more volatile than Rising Rates Opportunity. It trades about 0.21 of its potential returns per unit of risk. Rising Rates Opportunity is currently generating about 0.07 per unit of risk. If you would invest 10,977 in Small Cap Value Profund on August 27, 2024 and sell it today you would earn a total of 812.00 from holding Small Cap Value Profund or generate 7.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Value Profund vs. Rising Rates Opportunity
Performance |
| Timeline |
| Small Cap Value |
| Rising Rates Opportunity |
Small-cap Value and Rising Rates Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small-cap Value and Rising Rates
The main advantage of trading using opposite Small-cap Value and Rising Rates positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small-cap Value position performs unexpectedly, Rising Rates 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 Rising Rates will offset losses from the drop in Rising Rates' long position.| Small-cap Value vs. Evaluator Conservative Rms | Small-cap Value vs. American Funds Conservative | Small-cap Value vs. Pgim Conservative Retirement | Small-cap Value vs. Fidelity Advisor Diversified |
| Rising Rates vs. Short Real Estate | Rising Rates vs. Short Real Estate | Rising Rates vs. Ultrashort Mid Cap Profund | Rising Rates vs. Ultrashort Mid Cap Profund |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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