Correlation Between Large Cap and Astoncrosswind Small

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

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

Diversification Opportunities for Large Cap and Astoncrosswind Small

0.46

Correlation Coefficient

Large Cap  Astoncrosswind Small

Very weak diversification

The 3 months correlation between Large and Astoncrosswind is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Large Cap Growth and Astoncrosswind Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astoncrosswind Small Cap and Large Cap 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 Large Cap Growth are associated (or correlated) with Astoncrosswind Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astoncrosswind Small Cap has no effect on the direction of Large Cap i.e., Large Cap and Astoncrosswind Small go up and down completely randomly.

Pair Corralation between Large Cap and Astoncrosswind Small

Assuming the 90 days horizon Large Cap Growth is expected to under-perform the Astoncrosswind Small. In addition to that, Large Cap is 6.35 times more volatile than Astoncrosswind Small Cap. It trades about -0.21 of its total potential returns per unit of risk. Astoncrosswind Small Cap is currently generating about -0.36 per unit of volatility. If you would invest  1,870  in Astoncrosswind Small Cap on September 29, 2024 and sell it today you would lose (135.00) from holding Astoncrosswind Small Cap or give up 7.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Large Cap Growth  vs.  Astoncrosswind Small Cap

Large Cap Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Large Cap Growth 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 essential 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.

Astoncrosswind Small Cap

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Large Cap and Astoncrosswind Small

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

The idea behind Large Cap Growth and Astoncrosswind Small Cap 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.