Correlation Between Keeley Mid and Keeley Small

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

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

Diversification Opportunities for Keeley Mid and Keeley Small

0.98

Correlation Coefficient

Keeley Mid  Keeley Small

Almost no diversification

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

Pair Corralation between Keeley Mid and Keeley Small

Assuming the 90 days horizon Keeley Mid is expected to generate 1.26 times less return on investment than Keeley Small. But when comparing it to its historical volatility, Keeley Mid Cap is 1.26 times less risky than Keeley Small. It trades about 0.3 of its potential returns per unit of risk. Keeley Small Cap is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  1,826  in Keeley Small Cap on September 5, 2024 and sell it today you would earn a total of  168.00  from holding Keeley Small Cap or generate 9.2% return on investment over 90 days.

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

Keeley Mid Cap  vs.  Keeley Small Cap

Keeley Mid Cap

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Keeley Mid Cap are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Keeley Mid may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Keeley Small Cap

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Keeley Small Cap are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly conflicting forward indicators, Keeley Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Keeley Mid and Keeley Small

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

The idea behind Keeley Mid Cap and Keeley 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .