Correlation Between Scout Small and Value Fund
Can any of the company-specific risk be diversified away by investing in both Scout Small and Value Fund 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 Scout Small and Value Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scout Small Cap and Value Fund Value, you can compare the effects of market volatilities on Scout Small and Value Fund 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 Scout Small with a short position of Value Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scout Small and Value Fund.
Diversification Opportunities for Scout Small and Value Fund
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Scout and Value is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Scout Small Cap and Value Fund Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Fund Value and Scout Small 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 Scout Small Cap are associated (or correlated) with Value Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Fund Value has no effect on the direction of Scout Small i.e., Scout Small and Value Fund go up and down completely randomly.
Pair Corralation between Scout Small and Value Fund
Assuming the 90 days horizon Scout Small Cap is expected to generate 2.41 times more return on investment than Value Fund. However, Scout Small is 2.41 times more volatile than Value Fund Value. It trades about 0.24 of its potential returns per unit of risk. Value Fund Value is currently generating about 0.28 per unit of risk. If you would invest 3,152 in Scout Small Cap on August 31, 2024 and sell it today you would earn a total of 300.00 from holding Scout Small Cap or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scout Small Cap vs. Value Fund Value
Performance |
| Timeline |
| Scout Small Cap |
| Value Fund Value |
Scout Small and Value Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scout Small and Value Fund
The main advantage of trading using opposite Scout Small and Value Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scout Small position performs unexpectedly, Value Fund 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 Value Fund will offset losses from the drop in Value Fund's long position.| Scout Small vs. Qs Large Cap | Scout Small vs. Legg Mason Bw | Scout Small vs. Goldman Sachs Large | Scout Small vs. Principal Lifetime Hybrid |
| Value Fund vs. Inverse Government Long | Value Fund vs. John Hancock Government | Value Fund vs. Dreyfus Government Cash | Value Fund vs. Us Government Securities |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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