Correlation Between Undiscovered Managers and Keeley Small
Can any of the company-specific risk be diversified away by investing in both Undiscovered Managers and Keeley Small 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 Undiscovered Managers and Keeley Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Undiscovered Managers Behavioral and Keeley Small Cap, you can compare the effects of market volatilities on Undiscovered Managers and Keeley Small 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 Undiscovered Managers with a short position of Keeley Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Undiscovered Managers and Keeley Small.
Diversification Opportunities for Undiscovered Managers and Keeley Small
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between UNDISCOVERED and Keeley is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Undiscovered Managers Behavior and Keeley Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keeley Small Cap and Undiscovered Managers 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 Undiscovered Managers Behavioral are associated (or correlated) with Keeley Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keeley Small Cap has no effect on the direction of Undiscovered Managers i.e., Undiscovered Managers and Keeley Small go up and down completely randomly.
Pair Corralation between Undiscovered Managers and Keeley Small
Assuming the 90 days horizon Undiscovered Managers is expected to generate 1.56 times less return on investment than Keeley Small. But when comparing it to its historical volatility, Undiscovered Managers Behavioral is 1.01 times less risky than Keeley Small. It trades about 0.07 of its potential returns per unit of risk. Keeley Small Cap is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,537 in Keeley Small Cap on August 29, 2024 and sell it today you would earn a total of 460.00 from holding Keeley Small Cap or generate 29.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Undiscovered Managers Behavior vs. Keeley Small Cap
Performance |
| Timeline |
| Undiscovered Managers |
| Keeley Small Cap |
Undiscovered Managers and Keeley Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Undiscovered Managers and Keeley Small
The main advantage of trading using opposite Undiscovered Managers and Keeley Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Undiscovered Managers position performs unexpectedly, Keeley Small 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 Keeley Small will offset losses from the drop in Keeley Small's long position.The idea behind Undiscovered Managers Behavioral and Keeley Small Cap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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