Correlation Between Royce Global and Fam Small

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

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

Diversification Opportunities for Royce Global and Fam Small

0.0

Correlation Coefficient

Royce Global  Fam Small

Pay attention - limited upside

The 3 months correlation between Royce and Fam is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Royce Global Financial and Fam Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fam Small Cap and Royce Global 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 Royce Global Financial are associated (or correlated) with Fam Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fam Small Cap has no effect on the direction of Royce Global i.e., Royce Global and Fam Small go up and down completely randomly.

Pair Corralation between Royce Global and Fam Small

Assuming the 90 days horizon Royce Global Financial is expected to under-perform the Fam Small. In addition to that, Royce Global is 2.3 times more volatile than Fam Small Cap. It trades about -0.02 of its total potential returns per unit of risk. Fam Small Cap is currently generating about 0.06 per unit of volatility. If you would invest  2,204  in Fam Small Cap on September 15, 2024 and sell it today you would earn a total of  730.00  from holding Fam Small Cap or generate 33.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.19%
Values	Daily Returns

Royce Global Financial  vs.  Fam Small Cap

Royce Global Financial

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fam Small Cap

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fam Small Cap are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Fam Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Royce Global and Fam Small

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

The idea behind Royce Global Financial and Fam 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 CEOs Directory module to screen CEOs from public companies around the world.