Correlation Between Small Cap and Usaa Nasdaq

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

By analyzing existing cross correlation between Small Cap Stock and Usaa Nasdaq 100, you can compare the effects of market volatilities on Small Cap and Usaa Nasdaq 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 Usaa Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Usaa Nasdaq.

Diversification Opportunities for Small Cap and Usaa Nasdaq

0.0

Correlation Coefficient

Small Cap  Usaa Nasdaq

Pay attention - limited upside

The 3 months correlation between Small and Usaa is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Stock and Usaa Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Usaa Nasdaq 100 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 Stock are associated (or correlated) with Usaa Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Usaa Nasdaq 100 has no effect on the direction of Small Cap i.e., Small Cap and Usaa Nasdaq go up and down completely randomly.

Pair Corralation between Small Cap and Usaa Nasdaq

If you would invest (100.00) in Usaa Nasdaq 100 on October 1, 2024 and sell it today you would earn a total of  100.00  from holding Usaa Nasdaq 100 or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Small Cap Stock  vs.  Usaa Nasdaq 100

Small Cap Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Small Cap Stock has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Small Cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Usaa Nasdaq 100

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Usaa Nasdaq 100 are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Usaa Nasdaq may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Small Cap and Usaa Nasdaq

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

The idea behind Small Cap Stock and Usaa Nasdaq 100 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.

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