Correlation Between Smallcap and Ab Small

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

By analyzing existing cross correlation between Smallcap Sp 600 and Ab Small Cap, you can compare the effects of market volatilities on Smallcap and Ab Small 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 with a short position of Ab Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap and Ab Small.

Diversification Opportunities for Smallcap and Ab Small

-0.04

Correlation Coefficient

Smallcap  Ab Small

Good diversification

The 3 months correlation between Smallcap and QUAKX is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Sp 600 and Ab Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Small Cap and Smallcap 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 Sp 600 are associated (or correlated) with Ab Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Small Cap has no effect on the direction of Smallcap i.e., Smallcap and Ab Small go up and down completely randomly.

Pair Corralation between Smallcap and Ab Small

If you would invest  2,935  in Smallcap Sp 600 on October 8, 2024 and sell it today you would earn a total of  0.00  from holding Smallcap Sp 600 or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	5.26%
Values	Daily Returns

Smallcap Sp 600  vs.  Ab Small Cap

Smallcap Sp 600

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Smallcap Sp 600 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly weak basic indicators, Smallcap showed solid returns over the last few months and may actually be approaching a breakup point.

Ab Small Cap

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ab Small Cap are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking signals, Ab Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Smallcap and Ab Small

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

The idea behind Smallcap Sp 600 and Ab Small 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.

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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 Commodity Directory module to find actively traded commodities issued by global exchanges.