Correlation Between Special Opportunities and Conestoga Smid

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

By analyzing existing cross correlation between Special Opportunities Closed and Conestoga Smid Cap, you can compare the effects of market volatilities on Special Opportunities and Conestoga Smid 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 Special Opportunities with a short position of Conestoga Smid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Special Opportunities and Conestoga Smid.

Diversification Opportunities for Special Opportunities and Conestoga Smid

0.87

Correlation Coefficient

Special Opportunities  Conestoga Smid

Very poor diversification

The 3 months correlation between Special and Conestoga is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Special Opportunities Closed and Conestoga Smid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conestoga Smid Cap and Special Opportunities 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 Special Opportunities Closed are associated (or correlated) with Conestoga Smid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conestoga Smid Cap has no effect on the direction of Special Opportunities i.e., Special Opportunities and Conestoga Smid go up and down completely randomly.

Pair Corralation between Special Opportunities and Conestoga Smid

Considering the 90-day investment horizon Special Opportunities Closed is expected to generate 0.74 times more return on investment than Conestoga Smid. However, Special Opportunities Closed is 1.36 times less risky than Conestoga Smid. It trades about 0.31 of its potential returns per unit of risk. Conestoga Smid Cap is currently generating about 0.22 per unit of risk. If you would invest  1,334  in Special Opportunities Closed on September 5, 2024 and sell it today you would earn a total of  202.00  from holding Special Opportunities Closed or generate 15.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Special Opportunities Closed  vs.  Conestoga Smid Cap

Special Opportunities

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Special Opportunities Closed are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather unsteady basic indicators, Special Opportunities exhibited solid returns over the last few months and may actually be approaching a breakup point.

Conestoga Smid Cap

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Conestoga Smid Cap are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Conestoga Smid showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Special Opportunities and Conestoga Smid

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

The idea behind Special Opportunities Closed and Conestoga Smid 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.