Correlation Between Small Company and Multi-index 2050

Can any of the company-specific risk be diversified away by investing in both Small Company and Multi-index 2050 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 Company and Multi-index 2050 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 Multi Index 2050 Lifetime, you can compare the effects of market volatilities on Small Company and Multi-index 2050 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 Company with a short position of Multi-index 2050. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Company and Multi-index 2050.

Diversification Opportunities for Small Company and Multi-index 2050

0.54

Correlation Coefficient

Small Company  Multi-index 2050

Very weak diversification

The 3 months correlation between Small and Multi-index is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Small Pany Growth and Multi Index 2050 Lifetime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Index 2050 and Small Company 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 Multi-index 2050. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Index 2050 has no effect on the direction of Small Company i.e., Small Company and Multi-index 2050 go up and down completely randomly.

Pair Corralation between Small Company and Multi-index 2050

Assuming the 90 days horizon Small Pany Growth is expected to under-perform the Multi-index 2050. In addition to that, Small Company is 2.98 times more volatile than Multi Index 2050 Lifetime. It trades about -0.25 of its total potential returns per unit of risk. Multi Index 2050 Lifetime is currently generating about -0.06 per unit of volatility. If you would invest  1,503  in Multi Index 2050 Lifetime on December 4, 2024 and sell it today you would lose (14.00) from holding Multi Index 2050 Lifetime or give up 0.93% of portfolio value over 90 days.

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

Small Pany Growth  vs.  Multi Index 2050 Lifetime

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 weak performance in the last few months, the Fund's technical and fundamental 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.

Multi Index 2050

Risk-Adjusted Performance

Very Weak

Over the last 90 days Multi Index 2050 Lifetime has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Multi-index 2050 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Small Company and Multi-index 2050

The main advantage of trading using opposite Small Company and Multi-index 2050 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Company position performs unexpectedly, Multi-index 2050 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 Multi-index 2050 will offset losses from the drop in Multi-index 2050's long position.

The idea behind Small Pany Growth and Multi Index 2050 Lifetime 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.