Correlation Between Short-term Income and Smallcap Fund

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

By analyzing existing cross correlation between Short Term Income Fund and Smallcap Fund Fka, you can compare the effects of market volatilities on Short-term Income and Smallcap Fund 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 Short-term Income with a short position of Smallcap Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short-term Income and Smallcap Fund.

Diversification Opportunities for Short-term Income and Smallcap Fund

0.0

Correlation Coefficient

Short-term Income  Smallcap Fund

Pay attention - limited upside

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

Pair Corralation between Short-term Income and Smallcap Fund

If you would invest  0.00  in Short Term Income Fund on December 31, 2024 and sell it today you would earn a total of  0.00  from holding Short Term Income Fund or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.64%
Values	Daily Returns

Short Term Income Fund  vs.  Smallcap Fund Fka

Short Term Income

Risk-Adjusted Performance

Very Weak

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

Smallcap Fund Fka

Risk-Adjusted Performance

Very Weak

Over the last 90 days Smallcap Fund Fka has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Short-term Income and Smallcap Fund

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

The idea behind Short Term Income Fund and Smallcap Fund Fka 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.