Correlation Between Small Cap and 126408GW7

Can any of the company-specific risk be diversified away by investing in both Small Cap and 126408GW7 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 Cap and 126408GW7 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Small Cap Premium and CSX P 475, you can compare the effects of market volatilities on Small Cap and 126408GW7 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 Cap with a short position of 126408GW7. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and 126408GW7.

Diversification Opportunities for Small Cap and 126408GW7

-0.61

Correlation Coefficient

Small Cap  126408GW7

Excellent diversification

The 3 months correlation between Small and 126408GW7 is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Premium and CSX P 475 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSX P 475 and Small Cap 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 Cap Premium are associated (or correlated) with 126408GW7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSX P 475 has no effect on the direction of Small Cap i.e., Small Cap and 126408GW7 go up and down completely randomly.

Pair Corralation between Small Cap and 126408GW7

Considering the 90-day investment horizon Small Cap Premium is expected to under-perform the 126408GW7. But the stock apears to be less risky and, when comparing its historical volatility, Small Cap Premium is 1.94 times less risky than 126408GW7. The stock trades about 0.0 of its potential returns per unit of risk. The CSX P 475 is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  9,279  in CSX P 475 on October 9, 2024 and sell it today you would earn a total of  60.00  from holding CSX P 475 or generate 0.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	73.68%
Values	Daily Returns

Small Cap Premium  vs.  CSX P 475

Small Cap Premium

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Small Cap Premium are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Small Cap is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

CSX P 475

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSX P 475 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 126408GW7 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 Cap and 126408GW7

The main advantage of trading using opposite Small Cap and 126408GW7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, 126408GW7 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 126408GW7 will offset losses from the drop in 126408GW7's long position.

The idea behind Small Cap Premium and CSX P 475 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.