Correlation Between Small Cap and Asg Managed

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

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

Diversification Opportunities for Small Cap and Asg Managed

0.02

Correlation Coefficient

Small Cap  Asg Managed

Significant diversification

The 3 months correlation between Small and Asg is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Value and Asg Managed Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asg Managed Futures 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 Value are associated (or correlated) with Asg Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asg Managed Futures has no effect on the direction of Small Cap i.e., Small Cap and Asg Managed go up and down completely randomly.

Pair Corralation between Small Cap and Asg Managed

Assuming the 90 days horizon Small Cap Value is expected to under-perform the Asg Managed. In addition to that, Small Cap is 3.39 times more volatile than Asg Managed Futures. It trades about -0.31 of its total potential returns per unit of risk. Asg Managed Futures is currently generating about 0.13 per unit of volatility. If you would invest  874.00  in Asg Managed Futures on October 11, 2024 and sell it today you would earn a total of  12.00  from holding Asg Managed Futures or generate 1.37% return on investment over 90 days.

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

Small Cap Value  vs.  Asg Managed Futures

Small Cap Value

Risk-Adjusted Performance

0 of 100

Very Weak

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

Asg Managed Futures

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Asg Managed Futures are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Asg Managed 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 Asg Managed

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

The idea behind Small Cap Value and Asg Managed Futures 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.