Correlation Between Small Cap and Hewitt Money
Can any of the company-specific risk be diversified away by investing in both Small Cap and Hewitt Money 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 and Hewitt Money into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Stock and Hewitt Money Market, you can compare the effects of market volatilities on Small Cap and Hewitt Money 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 with a short position of Hewitt Money. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Hewitt Money.
Diversification Opportunities for Small Cap and Hewitt Money
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Small and Hewitt is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Stock and Hewitt Money Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hewitt Money Market and Small Cap 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 Stock are associated (or correlated) with Hewitt Money. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hewitt Money Market has no effect on the direction of Small Cap i.e., Small Cap and Hewitt Money go up and down completely randomly.
Pair Corralation between Small Cap and Hewitt Money
Assuming the 90 days horizon Small Cap Stock is expected to generate 1.76 times more return on investment than Hewitt Money. However, Small Cap is 1.76 times more volatile than Hewitt Money Market. It trades about 0.02 of its potential returns per unit of risk. Hewitt Money Market is currently generating about 0.02 per unit of risk. If you would invest 1,258 in Small Cap Stock on October 26, 2024 and sell it today you would earn a total of 108.00 from holding Small Cap Stock or generate 8.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.0% |
| Values | Daily Returns |
Small Cap Stock vs. Hewitt Money Market
Performance |
| Timeline |
| Small Cap Stock |
| Hewitt Money Market |
Small Cap and Hewitt Money Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Hewitt Money
The main advantage of trading using opposite Small Cap and Hewitt Money positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Hewitt Money 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 Hewitt Money will offset losses from the drop in Hewitt Money's long position.| Small Cap vs. Nasdaq 100 Index Fund | Small Cap vs. Scharf Global Opportunity | Small Cap vs. Tfa Quantitative | Small Cap vs. Vanguard Windsor Ii |
| Hewitt Money vs. Dodge Cox Stock | Hewitt Money vs. Smead Value Fund | Hewitt Money vs. Transamerica Large Cap | Hewitt Money vs. Tax Managed Large Cap |
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.
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