Correlation Between Cardinal Small and Wcm Focused

Can any of the company-specific risk be diversified away by investing in both Cardinal Small and Wcm Focused 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 Wcm Focused 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 Wcm Focused International, you can compare the effects of market volatilities on Cardinal Small and Wcm Focused 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 Wcm Focused. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Small and Wcm Focused.

Diversification Opportunities for Cardinal Small and Wcm Focused

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Correlation Coefficient

Cardinal Small  Wcm Focused

Pay attention - limited upside

The 3 months correlation between Cardinal and Wcm is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Small Cap and Wcm Focused International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wcm Focused International 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 Wcm Focused. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wcm Focused International has no effect on the direction of Cardinal Small i.e., Cardinal Small and Wcm Focused go up and down completely randomly.

Pair Corralation between Cardinal Small and Wcm Focused

Assuming the 90 days horizon Cardinal Small Cap is expected to generate 1.05 times more return on investment than Wcm Focused. However, Cardinal Small is 1.05 times more volatile than Wcm Focused International. It trades about 0.01 of its potential returns per unit of risk. Wcm Focused International is currently generating about 0.01 per unit of risk. If you would invest  1,382  in Cardinal Small Cap on October 23, 2024 and sell it today you would earn a total of  62.00  from holding Cardinal Small Cap or generate 4.49% return on investment over 90 days.

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

Cardinal Small Cap  vs.  Wcm Focused International

Cardinal Small Cap

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Cardinal Small Cap has generated negative risk-adjusted returns adding no value to fund investors. 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.

Wcm Focused International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wcm Focused International 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 forward indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Cardinal Small and Wcm Focused

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

The idea behind Cardinal Small Cap and Wcm Focused International 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.