Correlation Between Themes Small and AGFiQ Market

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

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

Diversification Opportunities for Themes Small and AGFiQ Market

-0.91

Correlation Coefficient

Themes Small  AGFiQ Market

Pay attention - limited upside

The 3 months correlation between Themes and AGFiQ is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Themes Small Cap and AGFiQ Market Neutral in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGFiQ Market Neutral and Themes Small 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 Themes Small Cap are associated (or correlated) with AGFiQ Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGFiQ Market Neutral has no effect on the direction of Themes Small i.e., Themes Small and AGFiQ Market go up and down completely randomly.

Pair Corralation between Themes Small and AGFiQ Market

Given the investment horizon of 90 days Themes Small Cap is expected to generate 1.46 times more return on investment than AGFiQ Market. However, Themes Small is 1.46 times more volatile than AGFiQ Market Neutral. It trades about 0.18 of its potential returns per unit of risk. AGFiQ Market Neutral is currently generating about -0.16 per unit of risk. If you would invest  2,988  in Themes Small Cap on September 2, 2024 and sell it today you would earn a total of  427.00  from holding Themes Small Cap or generate 14.29% return on investment over 90 days.

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

Themes Small Cap  vs.  AGFiQ Market Neutral

Themes Small Cap

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Themes Small Cap are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal fundamental indicators, Themes Small reported solid returns over the last few months and may actually be approaching a breakup point.

AGFiQ Market Neutral

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AGFiQ Market Neutral has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Etf's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

Pair Trading with Themes Small and AGFiQ Market

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

The idea behind Themes Small Cap and AGFiQ Market Neutral 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..