Correlation Between Extended Market and Cardinal Small
Can any of the company-specific risk be diversified away by investing in both Extended Market and Cardinal 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 Extended Market and Cardinal Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Extended Market Index and Cardinal Small Cap, you can compare the effects of market volatilities on Extended Market and Cardinal 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 Extended Market with a short position of Cardinal Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extended Market and Cardinal Small.
Diversification Opportunities for Extended Market and Cardinal Small
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Extended and Cardinal is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Extended Market Index and Cardinal Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Small Cap and Extended Market 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 Extended Market Index are associated (or correlated) with Cardinal Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Small Cap has no effect on the direction of Extended Market i.e., Extended Market and Cardinal Small go up and down completely randomly.
Pair Corralation between Extended Market and Cardinal Small
If you would invest 1,444 in Cardinal Small Cap on October 12, 2024 and sell it today you would earn a total of 0.00 from holding Cardinal Small Cap or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Extended Market Index vs. Cardinal Small Cap
Performance |
| Timeline |
| Extended Market Index |
| Cardinal Small Cap |
Extended Market and Cardinal Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Extended Market and Cardinal Small
The main advantage of trading using opposite Extended Market and Cardinal Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extended Market position performs unexpectedly, Cardinal 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 Cardinal Small will offset losses from the drop in Cardinal Small's long position.| Extended Market vs. M Large Cap | Extended Market vs. Qs Large Cap | Extended Market vs. Fundamental Large Cap | Extended Market vs. Guidemark Large Cap |
| Cardinal Small vs. Lord Abbett Diversified | Cardinal Small vs. Aqr Sustainable Long Short | Cardinal Small vs. Investec Emerging Markets | Cardinal Small vs. Extended Market Index |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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