Correlation Between Small Cap and Cohen Steers
Can any of the company-specific risk be diversified away by investing in both Small Cap and Cohen Steers 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 Cohen Steers 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 Cohen Steers Real, you can compare the effects of market volatilities on Small Cap and Cohen Steers 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 Cohen Steers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Cohen Steers.
Diversification Opportunities for Small Cap and Cohen Steers
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Small and Cohen is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Stock and Cohen Steers Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohen Steers Real 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 Cohen Steers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cohen Steers Real has no effect on the direction of Small Cap i.e., Small Cap and Cohen Steers go up and down completely randomly.
Pair Corralation between Small Cap and Cohen Steers
Assuming the 90 days horizon Small Cap Stock is expected to generate 2.4 times more return on investment than Cohen Steers. However, Small Cap is 2.4 times more volatile than Cohen Steers Real. It trades about 0.06 of its potential returns per unit of risk. Cohen Steers Real is currently generating about 0.08 per unit of risk. If you would invest 1,298 in Small Cap Stock on September 3, 2024 and sell it today you would earn a total of 231.00 from holding Small Cap Stock or generate 17.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Stock vs. Cohen Steers Real
Performance |
| Timeline |
| Small Cap Stock |
| Cohen Steers Real |
Small Cap and Cohen Steers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Cohen Steers
The main advantage of trading using opposite Small Cap and Cohen Steers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Cohen Steers 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 Cohen Steers will offset losses from the drop in Cohen Steers' long position.| Small Cap vs. Vanguard Small Cap Index | Small Cap vs. Vanguard Small Cap Index | Small Cap vs. Vanguard Small Cap Index | Small Cap vs. Vanguard Small Cap Index |
| Cohen Steers vs. Virtus High Yield | Cohen Steers vs. Lord Abbett High | Cohen Steers vs. Artisan High Income | Cohen Steers vs. Siit High Yield |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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