Correlation Between Multimedia Portfolio and Small Company

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

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

Diversification Opportunities for Multimedia Portfolio and Small Company

0.9

Correlation Coefficient

Multimedia Portfolio  Small Company

Almost no diversification

The 3 months correlation between Multimedia and Small is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Multimedia Portfolio Multimedi and Small Company Stock Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Stock Fund and Multimedia Portfolio 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 Multimedia Portfolio Multimedia are associated (or correlated) with Small Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Stock Fund has no effect on the direction of Multimedia Portfolio i.e., Multimedia Portfolio and Small Company go up and down completely randomly.

Pair Corralation between Multimedia Portfolio and Small Company

Assuming the 90 days horizon Multimedia Portfolio Multimedia is expected to generate 0.77 times more return on investment than Small Company. However, Multimedia Portfolio Multimedia is 1.29 times less risky than Small Company. It trades about 0.28 of its potential returns per unit of risk. Small Company Stock Fund is currently generating about 0.17 per unit of risk. If you would invest  10,019  in Multimedia Portfolio Multimedia on September 13, 2024 and sell it today you would earn a total of  1,691  from holding Multimedia Portfolio Multimedia or generate 16.88% return on investment over 90 days.

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

Multimedia Portfolio Multimedi  vs.  Small Company Stock Fund

Multimedia Portfolio

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Multimedia Portfolio Multimedia are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Multimedia Portfolio showed solid returns over the last few months and may actually be approaching a breakup point.

Small Stock Fund

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Small Company Stock Fund are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Small Company showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Multimedia Portfolio and Small Company

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

The idea behind Multimedia Portfolio Multimedia and Small Company Stock 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.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.