Correlation Between Api Multi-asset and Yorktown Small-cap

Can any of the company-specific risk be diversified away by investing in both Api Multi-asset and Yorktown Small-cap 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 Api Multi-asset and Yorktown Small-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Api Multi Asset Income and Yorktown Small Cap Fund, you can compare the effects of market volatilities on Api Multi-asset and Yorktown Small-cap 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 Api Multi-asset with a short position of Yorktown Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Api Multi-asset and Yorktown Small-cap.

Diversification Opportunities for Api Multi-asset and Yorktown Small-cap

0.61

Correlation Coefficient

Api Multi-asset  Yorktown Small-cap

Poor diversification

The 3 months correlation between Api and Yorktown is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Api Multi Asset Income and Yorktown Small Cap Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yorktown Small Cap and Api Multi-asset 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 Api Multi Asset Income are associated (or correlated) with Yorktown Small-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yorktown Small Cap has no effect on the direction of Api Multi-asset i.e., Api Multi-asset and Yorktown Small-cap go up and down completely randomly.

Pair Corralation between Api Multi-asset and Yorktown Small-cap

Assuming the 90 days horizon Api Multi-asset is expected to generate 14.06 times less return on investment than Yorktown Small-cap. But when comparing it to its historical volatility, Api Multi Asset Income is 4.29 times less risky than Yorktown Small-cap. It trades about 0.1 of its potential returns per unit of risk. Yorktown Small Cap Fund is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  1,477  in Yorktown Small Cap Fund on October 25, 2024 and sell it today you would earn a total of  81.00  from holding Yorktown Small Cap Fund or generate 5.48% return on investment over 90 days.

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

Api Multi Asset Income  vs.  Yorktown Small Cap Fund

Api Multi Asset

Risk-Adjusted Performance

0 of 100

Very Weak

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

Yorktown Small Cap

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with Api Multi-asset and Yorktown Small-cap

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

The idea behind Api Multi Asset Income and Yorktown Small Cap Fund 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.