Correlation Between Small Cap and 615369AW5

Can any of the company-specific risk be diversified away by investing in both Small Cap and 615369AW5 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 615369AW5 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Small Cap Premium and MCO 2 19 AUG 31, you can compare the effects of market volatilities on Small Cap and 615369AW5 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 615369AW5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and 615369AW5.

Diversification Opportunities for Small Cap and 615369AW5

-0.65

Correlation Coefficient

Small Cap  615369AW5

Excellent diversification

The 3 months correlation between Small and 615369AW5 is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Premium and MCO 2 19 AUG 31 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 615369AW5 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 Premium are associated (or correlated) with 615369AW5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 615369AW5 has no effect on the direction of Small Cap i.e., Small Cap and 615369AW5 go up and down completely randomly.

Pair Corralation between Small Cap and 615369AW5

Considering the 90-day investment horizon Small Cap Premium is expected to generate 0.87 times more return on investment than 615369AW5. However, Small Cap Premium is 1.15 times less risky than 615369AW5. It trades about 0.07 of its potential returns per unit of risk. MCO 2 19 AUG 31 is currently generating about -0.17 per unit of risk. If you would invest  2,399  in Small Cap Premium on September 14, 2024 and sell it today you would earn a total of  53.00  from holding Small Cap Premium or generate 2.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Small Cap Premium  vs.  MCO 2 19 AUG 31

Small Cap Premium

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Small Cap Premium are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Small Cap is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

615369AW5

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MCO 2 19 AUG 31 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 615369AW5 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Small Cap and 615369AW5

The main advantage of trading using opposite Small Cap and 615369AW5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, 615369AW5 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 615369AW5 will offset losses from the drop in 615369AW5's long position.

The idea behind Small Cap Premium and MCO 2 19 AUG 31 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.