Small Cap Correlations

GSCZX Fund  USD 16.48  0.08  0.48%   
The correlation of Small Cap is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak. If the correlation is 0, the equities are not correlated; they are entirely random.

Small Cap Correlation With Market

Poor diversification

The correlation between Small Cap Equity and DJI is 0.73 (i.e., Poor diversification) for selected investment horizon. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Equity and DJI in the same portfolio, assuming nothing else is changed.
  
Check out Risk vs Return Analysis to better understand how to build diversified portfolios, which includes a position in Small Cap Equity. Also, note that the market value of any mutual fund could be closely tied with the direction of predictive economic indicators such as signals in nation.

Moving together with Small Mutual Fund

  0.84GDMYX Defensive Market StrPairCorr
  0.84GDMZX Defensive Market StrPairCorr
  0.93GEIYX Guidestone Growth EquityPairCorr
  0.93GEIZX Guidestone Growth EquityPairCorr
  0.91GEQYX Equity Index InstituPairCorr
  0.92GEQZX Equity Index InvestorPairCorr
  0.95GGEYX Guidestone Fds GrowthPairCorr
  0.95GGEZX Growth Equity InvestorPairCorr

Moving against Small Mutual Fund

  0.72GLDZX Low Duration BondPairCorr
  0.68GLDYX Low Duration BondPairCorr
  0.59GMDZX Medium Duration BondPairCorr
  0.58GMDYX Medium Duration BondPairCorr
  0.55GIIZX Guidestone Funds IntPairCorr
  0.53GIEYX International EquityPairCorr
  0.53GIIYX International EquityPairCorr
  0.52GGBFX Global Bond FundPairCorr
  0.51GGBEX Global Bond FundPairCorr
  0.49GIEZX International EquityPairCorr
  0.38GFSYX Strategic AlternativesPairCorr
  0.37GFSZX Strategic AlternativesPairCorr
  0.61GMBYX Guidestone FundsPairCorr
  0.61GMBZX Guidestone FundsPairCorr

Related Correlations Analysis

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Correlation Matchups

Over a given time period, the two securities move together when the Correlation Coefficient is positive. Conversely, the two assets move in opposite directions when the Correlation Coefficient is negative. Determining your positions' relationship to each other is valuable for analyzing and projecting your portfolio's future expected return and risk.
High positive correlations   
PGHAXPHSTX
GTHIXGTHCX
XXGRXLOGSX
GTHIXBHSRX
PGHAXBHSRX
PGHAXGTHIX
  
High negative correlations   
PJHRXBHSRX

Risk-Adjusted Indicators

There is a big difference between Small Mutual Fund performing well and Small Cap Mutual Fund doing well as a business compared to the competition. There are so many exceptions to the norm that investors cannot definitively determine what's good or bad unless they analyze Small Cap's multiple risk-adjusted performance indicators across the competitive landscape. These indicators are quantitative in nature and help investors forecast volatility and risk-adjusted expected returns across various positions.