Correlation Between Small Cap and Palmer Square

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Small Cap and Palmer Square 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 Palmer Square 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 Palmer Square Ultra Short, you can compare the effects of market volatilities on Small Cap and Palmer Square 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 Palmer Square. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Palmer Square.

Diversification Opportunities for Small Cap and Palmer Square

SmallPALMERDiversified AwaySmallPALMERDiversified Away100%
-0.4
  Correlation Coefficient

Very good diversification

The 3 months correlation between Small and PALMER is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Value and Palmer Square Ultra Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palmer Square Ultra 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 Palmer Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palmer Square Ultra has no effect on the direction of Small Cap i.e., Small Cap and Palmer Square go up and down completely randomly.

Pair Corralation between Small Cap and Palmer Square

Assuming the 90 days horizon Small Cap Value is expected to under-perform the Palmer Square. In addition to that, Small Cap is 56.88 times more volatile than Palmer Square Ultra Short. It trades about 0.0 of its total potential returns per unit of risk. Palmer Square Ultra Short is currently generating about 0.7 per unit of volatility. If you would invest  1,972  in Palmer Square Ultra Short on October 30, 2024 and sell it today you would earn a total of  23.00  from holding Palmer Square Ultra Short or generate 1.17% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Small Cap Value  vs.  Palmer Square Ultra Short

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -50510
JavaScript chart by amCharts 3.21.15ASVIX PSDSX
       Timeline  
Small Cap Value 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan10.51111.512
Palmer Square Ultra 

Risk-Adjusted Performance

55 of 100

 
Weak
 
Strong
Excellent
Compared to the overall equity markets, risk-adjusted returns on investments in Palmer Square Ultra Short are ranked lower than 55 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Palmer Square is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan19.7519.819.8519.919.95

Small Cap and Palmer Square Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.88-3.65-2.43-1.20.021.222.453.674.9 100200300400500
JavaScript chart by amCharts 3.21.15ASVIX PSDSX
       Returns  

Pair Trading with Small Cap and Palmer Square

The main advantage of trading using opposite Small Cap and Palmer Square positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Palmer Square 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 Palmer Square will offset losses from the drop in Palmer Square's long position.
The idea behind Small Cap Value and Palmer Square Ultra Short 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

Other Complementary Tools

Analyst Advice
Analyst recommendations and target price estimates broken down by several categories
Portfolio Manager
State of the art Portfolio Manager to monitor and improve performance of your invested capital
Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets
FinTech Suite
Use AI to screen and filter profitable investment opportunities
AI Portfolio Architect
Use AI to generate optimal portfolios and find profitable investment opportunities