Correlation Between Keeley Small and Keeley Small-mid

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

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

Diversification Opportunities for Keeley Small and Keeley Small-mid

0.88

Correlation Coefficient

Keeley Small  Keeley Small-mid

Very poor diversification

The 3 months correlation between Keeley and Keeley is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Keeley Small Cap and Keeley Small Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keeley Small Mid and Keeley 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 Keeley Small Cap are associated (or correlated) with Keeley Small-mid. 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 Mid has no effect on the direction of Keeley Small i.e., Keeley Small and Keeley Small-mid go up and down completely randomly.

Pair Corralation between Keeley Small and Keeley Small-mid

Assuming the 90 days horizon Keeley Small is expected to generate 1.04 times less return on investment than Keeley Small-mid. But when comparing it to its historical volatility, Keeley Small Cap is 1.03 times less risky than Keeley Small-mid. It trades about 0.03 of its potential returns per unit of risk. Keeley Small Mid Cap is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  794.00  in Keeley Small Mid Cap on December 4, 2024 and sell it today you would earn a total of  106.00  from holding Keeley Small Mid Cap or generate 13.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.8%
Values	Daily Returns

Keeley Small Cap  vs.  Keeley Small Mid Cap

Keeley Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Keeley Small Cap 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 basic 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.

Keeley Small Mid

Risk-Adjusted Performance

Very Weak

Over the last 90 days Keeley Small Mid Cap 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 forward 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 Keeley Small and Keeley Small-mid

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

The idea behind Keeley Small Cap and Keeley Small Mid 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.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.