Correlation Between Nt Non and Small Cap

Can any of the company-specific risk be diversified away by investing in both Nt Non and Small Cap 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 Nt Non and Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nt Non US Intrinsic and Small Cap Growth, you can compare the effects of market volatilities on Nt Non 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 Nt Non with a short position of Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nt Non and Small Cap.

Diversification Opportunities for Nt Non and Small Cap

-0.78

Correlation Coefficient

Nt Non  Small Cap

Pay attention - limited upside

The 3 months correlation between ANTGX and Small is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Nt Non US Intrinsic and Small Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Growth and Nt Non 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 Nt Non US Intrinsic 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 Growth has no effect on the direction of Nt Non i.e., Nt Non and Small Cap go up and down completely randomly.

Pair Corralation between Nt Non and Small Cap

Assuming the 90 days horizon Nt Non is expected to generate 1.45 times less return on investment than Small Cap. But when comparing it to its historical volatility, Nt Non US Intrinsic is 1.24 times less risky than Small Cap. It trades about 0.05 of its potential returns per unit of risk. Small Cap Growth is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,194  in Small Cap Growth on September 17, 2024 and sell it today you would earn a total of  462.00  from holding Small Cap Growth or generate 38.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Nt Non US Intrinsic  vs.  Small Cap Growth

Nt Non Intrinsic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nt Non US Intrinsic has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Small Cap Growth

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Small Cap Growth are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Small Cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nt Non and Small Cap

The main advantage of trading using opposite Nt Non and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nt Non 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 Nt Non US Intrinsic and Small Cap Growth 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.

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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.