Correlation Between Driehaus Smallmid and Driehaus Multi

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Can any of the company-specific risk be diversified away by investing in both Driehaus Smallmid and Driehaus Multi 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 Driehaus Smallmid and Driehaus Multi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Driehaus Smallmid Cap and Driehaus Multi Asset Growth, you can compare the effects of market volatilities on Driehaus Smallmid and Driehaus Multi 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 Driehaus Smallmid with a short position of Driehaus Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Driehaus Smallmid and Driehaus Multi.

Diversification Opportunities for Driehaus Smallmid and Driehaus Multi

DriehausDriehausDiversified AwayDriehausDriehausDiversified Away100%
0.93
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Driehaus and Driehaus is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Driehaus Smallmid Cap and Driehaus Multi Asset Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Driehaus Multi Asset and Driehaus Smallmid 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 Driehaus Smallmid Cap are associated (or correlated) with Driehaus Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Driehaus Multi Asset has no effect on the direction of Driehaus Smallmid i.e., Driehaus Smallmid and Driehaus Multi go up and down completely randomly.

Pair Corralation between Driehaus Smallmid and Driehaus Multi

Assuming the 90 days horizon Driehaus Smallmid Cap is expected to generate 1.66 times more return on investment than Driehaus Multi. However, Driehaus Smallmid is 1.66 times more volatile than Driehaus Multi Asset Growth. It trades about 0.17 of its potential returns per unit of risk. Driehaus Multi Asset Growth is currently generating about 0.18 per unit of risk. If you would invest  1,774  in Driehaus Smallmid Cap on September 15, 2024 and sell it today you would earn a total of  236.00  from holding Driehaus Smallmid Cap or generate 13.3% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy98.46%
ValuesDaily Returns

Driehaus Smallmid Cap  vs.  Driehaus Multi Asset Growth

 Performance 
JavaScript chart by amCharts 3.21.15OctNov 5101520
JavaScript chart by amCharts 3.21.15DSMDX DMAGX
       Timeline  
Driehaus Smallmid Cap 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Driehaus Smallmid Cap are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Driehaus Smallmid showed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec18.51919.52020.521
Driehaus Multi Asset 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Driehaus Multi Asset Growth are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Driehaus Multi may actually be approaching a critical reversion point that can send shares even higher in January 2025.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec16.416.616.81717.217.417.6

Driehaus Smallmid and Driehaus Multi Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.57-2.68-1.78-0.880.00.961.962.963.954.95 0.20.40.60.8
JavaScript chart by amCharts 3.21.15DSMDX DMAGX
       Returns  

Pair Trading with Driehaus Smallmid and Driehaus Multi

The main advantage of trading using opposite Driehaus Smallmid and Driehaus Multi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Driehaus Smallmid position performs unexpectedly, Driehaus Multi 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 Driehaus Multi will offset losses from the drop in Driehaus Multi's long position.
The idea behind Driehaus Smallmid Cap and Driehaus Multi Asset 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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