Correlation Between Real Assets and Small Pany

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

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

Diversification Opportunities for Real Assets and Small Pany

-0.65

Correlation Coefficient

Real Assets  Small Pany

Excellent diversification

The 3 months correlation between Real and Small is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Real Assets Portfolio and Small Pany Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Pany Growth and Real Assets 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 Real Assets Portfolio are associated (or correlated) with Small Pany. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Pany Growth has no effect on the direction of Real Assets i.e., Real Assets and Small Pany go up and down completely randomly.

Pair Corralation between Real Assets and Small Pany

Assuming the 90 days horizon Real Assets Portfolio is expected to under-perform the Small Pany. But the mutual fund apears to be less risky and, when comparing its historical volatility, Real Assets Portfolio is 1.66 times less risky than Small Pany. The mutual fund trades about -0.21 of its potential returns per unit of risk. The Small Pany Growth is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,324  in Small Pany Growth on October 6, 2024 and sell it today you would earn a total of  294.00  from holding Small Pany Growth or generate 22.21% return on investment over 90 days.

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

Real Assets Portfolio  vs.  Small Pany Growth

Real Assets Portfolio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Real Assets Portfolio 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 fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Small Pany Growth

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Small Pany Growth are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Small Pany showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Real Assets and Small Pany

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

The idea behind Real Assets Portfolio and Small Pany Growth 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.