Correlation Between BLACK and Small Cap
Specify exactly 2 symbols:
By analyzing existing cross correlation between BLACK HILLS P and Small Cap Premium, you can compare the effects of market volatilities on BLACK and Small Cap 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 BLACK with a short position of Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of BLACK and Small Cap.
Diversification Opportunities for BLACK and Small Cap
Very weak diversification
The 3 months correlation between BLACK and Small is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding BLACK HILLS P and Small Cap Premium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Premium and BLACK 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 BLACK HILLS P are associated (or correlated) with Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Premium has no effect on the direction of BLACK i.e., BLACK and Small Cap go up and down completely randomly.
Pair Corralation between BLACK and Small Cap
Assuming the 90 days trading horizon BLACK is expected to generate 5.6 times less return on investment than Small Cap. But when comparing it to its historical volatility, BLACK HILLS P is 1.23 times less risky than Small Cap. It trades about 0.03 of its potential returns per unit of risk. Small Cap Premium is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,421 in Small Cap Premium on November 30, 2024 and sell it today you would earn a total of 37.00 from holding Small Cap Premium or generate 1.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 85.37% |
| Values | Daily Returns |
BLACK HILLS P vs. Small Cap Premium
Performance |
| Timeline |
| BLACK HILLS P |
| Small Cap Premium |
BLACK and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BLACK and Small Cap
The main advantage of trading using opposite BLACK and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BLACK position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.The idea behind BLACK HILLS P and Small Cap Premium 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.| Small Cap vs. RiverNorth Specialty Finance | Small Cap vs. Royce Micro Cap | Small Cap vs. First Trust Enhanced | Small Cap vs. Voya Global Advantage |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |