Correlation Between Elfun Trusts and Small Cap

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

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

Diversification Opportunities for Elfun Trusts and Small Cap

0.67

Correlation Coefficient

Elfun Trusts  Small Cap

Poor diversification

The 3 months correlation between Elfun and Small is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Elfun Trusts Elfun and Small Cap Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Value and Elfun Trusts 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 Elfun Trusts Elfun are associated (or correlated) with Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Value has no effect on the direction of Elfun Trusts i.e., Elfun Trusts and Small Cap go up and down completely randomly.

Pair Corralation between Elfun Trusts and Small Cap

Assuming the 90 days horizon Elfun Trusts Elfun is expected to generate 0.31 times more return on investment than Small Cap. However, Elfun Trusts Elfun is 3.28 times less risky than Small Cap. It trades about 0.27 of its potential returns per unit of risk. Small Cap Value Fund is currently generating about -0.19 per unit of risk. If you would invest  9,722  in Elfun Trusts Elfun on September 19, 2024 and sell it today you would earn a total of  265.00  from holding Elfun Trusts Elfun or generate 2.73% return on investment over 90 days.

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

Elfun Trusts Elfun  vs.  Small Cap Value Fund

Elfun Trusts Elfun

Risk-Adjusted Performance

8 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Elfun Trusts Elfun are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Elfun Trusts is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Small Cap Value

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Elfun Trusts and Small Cap

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

The idea behind Elfun Trusts Elfun and Small Cap Value 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.