Correlation Between Small Pany and Csjxx

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

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

Diversification Opportunities for Small Pany and Csjxx

-0.44

Correlation Coefficient

Small Pany  Csjxx

Very good diversification

The 3 months correlation between Small and Csjxx is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Small Pany Growth and Csjxx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Csjxx and Small Pany 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 Small Pany Growth are associated (or correlated) with Csjxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Csjxx has no effect on the direction of Small Pany i.e., Small Pany and Csjxx go up and down completely randomly.

Pair Corralation between Small Pany and Csjxx

Assuming the 90 days horizon Small Pany Growth is expected to under-perform the Csjxx. But the mutual fund apears to be less risky and, when comparing its historical volatility, Small Pany Growth is 39.04 times less risky than Csjxx. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Csjxx is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  100.00  in Csjxx on December 20, 2024 and sell it today you would earn a total of  0.00  from holding Csjxx or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.16%
Values	Daily Returns

Small Pany Growth  vs.  Csjxx

Small Pany Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Small Pany Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Csjxx

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Csjxx are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Csjxx showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Small Pany and Csjxx

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

The idea behind Small Pany Growth and Csjxx 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.