Correlation Between Cardinal Small and International Equity

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

By analyzing existing cross correlation between Cardinal Small Cap and International Equity Investor, you can compare the effects of market volatilities on Cardinal Small and International Equity 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 Cardinal Small with a short position of International Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Small and International Equity.

Diversification Opportunities for Cardinal Small and International Equity

-0.26

Correlation Coefficient

Cardinal Small  International Equity

Very good diversification

The 3 months correlation between Cardinal and International is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Small Cap and International Equity Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Equity and Cardinal Small 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 Cardinal Small Cap are associated (or correlated) with International Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Equity has no effect on the direction of Cardinal Small i.e., Cardinal Small and International Equity go up and down completely randomly.

Pair Corralation between Cardinal Small and International Equity

If you would invest  1,444  in Cardinal Small Cap on September 21, 2024 and sell it today you would earn a total of  0.00  from holding Cardinal Small Cap or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Cardinal Small Cap  vs.  International Equity Investor

Cardinal Small Cap

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Small Cap are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Cardinal Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

International Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Equity Investor has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Cardinal Small and International Equity

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

The idea behind Cardinal Small Cap and International Equity Investor 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.