Correlation Between Us Small and Acuitas Us

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

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

Diversification Opportunities for Us Small and Acuitas Us

0.98

Correlation Coefficient

Us Small  Acuitas Us

Almost no diversification

The 3 months correlation between DFSTX and Acuitas is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Us Small Cap and Acuitas Microcap Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acuitas Microcap and Us 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 Us Small Cap are associated (or correlated) with Acuitas Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acuitas Microcap has no effect on the direction of Us Small i.e., Us Small and Acuitas Us go up and down completely randomly.

Pair Corralation between Us Small and Acuitas Us

Assuming the 90 days horizon Us Small Cap is expected to generate 0.79 times more return on investment than Acuitas Us. However, Us Small Cap is 1.27 times less risky than Acuitas Us. It trades about -0.1 of its potential returns per unit of risk. Acuitas Microcap Fund is currently generating about -0.15 per unit of risk. If you would invest  4,910  in Us Small Cap on December 21, 2024 and sell it today you would lose (325.00) from holding Us Small Cap or give up 6.62% of portfolio value over 90 days.

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

Us Small Cap  vs.  Acuitas Microcap Fund

Us Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Us Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Acuitas Microcap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Acuitas Microcap Fund 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 fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Us Small and Acuitas Us

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

The idea behind Us Small Cap and Acuitas Microcap 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.