Correlation Between Smallcap Growth and Crawford Dividend

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

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

Diversification Opportunities for Smallcap Growth and Crawford Dividend

0.75

Correlation Coefficient

Smallcap Growth  Crawford Dividend

Poor diversification

The 3 months correlation between Smallcap and Crawford is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Growth Fund and Crawford Dividend Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crawford Dividend Growth and Smallcap Growth 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 Smallcap Growth Fund are associated (or correlated) with Crawford Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crawford Dividend Growth has no effect on the direction of Smallcap Growth i.e., Smallcap Growth and Crawford Dividend go up and down completely randomly.

Pair Corralation between Smallcap Growth and Crawford Dividend

Assuming the 90 days horizon Smallcap Growth Fund is expected to generate 1.69 times more return on investment than Crawford Dividend. However, Smallcap Growth is 1.69 times more volatile than Crawford Dividend Growth. It trades about 0.03 of its potential returns per unit of risk. Crawford Dividend Growth is currently generating about 0.03 per unit of risk. If you would invest  1,294  in Smallcap Growth Fund on October 5, 2024 and sell it today you would earn a total of  195.00  from holding Smallcap Growth Fund or generate 15.07% return on investment over 90 days.

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

Smallcap Growth Fund  vs.  Crawford Dividend Growth

Smallcap Growth

Risk-Adjusted Performance

0 of 100

Very Weak

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

Crawford Dividend Growth

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Smallcap Growth and Crawford Dividend

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

The idea behind Smallcap Growth Fund and Crawford Dividend 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.