Correlation Between Small Cap and Axiologix

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

By analyzing existing cross correlation between Small Cap Core and Axiologix, you can compare the effects of market volatilities on Small Cap and Axiologix 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 Axiologix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Axiologix.

Diversification Opportunities for Small Cap and Axiologix

0.0

Correlation Coefficient

Small Cap  Axiologix

Pay attention - limited upside

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

Pair Corralation between Small Cap and Axiologix

If you would invest  1,343  in Small Cap Core on September 3, 2024 and sell it today you would earn a total of  159.00  from holding Small Cap Core or generate 11.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Small Cap Core  vs.  Axiologix

Small Cap Core

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Small Cap Core are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Small Cap may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Axiologix

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Axiologix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Axiologix 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 Axiologix

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

The idea behind Small Cap Core and Axiologix 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.

Check out your portfolio center.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.