Correlation Between International Equity and Century Small
Can any of the company-specific risk be diversified away by investing in both International Equity and Century 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 International Equity and Century Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Equity Fund and Century Small Cap, you can compare the effects of market volatilities on International Equity and Century 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 International Equity with a short position of Century Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Equity and Century Small.
Diversification Opportunities for International Equity and Century Small
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between International and Century is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding International Equity Fund and Century Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Small Cap and International Equity 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 International Equity Fund are associated (or correlated) with Century Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Small Cap has no effect on the direction of International Equity i.e., International Equity and Century Small go up and down completely randomly.
Pair Corralation between International Equity and Century Small
Assuming the 90 days horizon International Equity Fund is expected to under-perform the Century Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, International Equity Fund is 1.32 times less risky than Century Small. The mutual fund trades about -0.22 of its potential returns per unit of risk. The Century Small Cap is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 3,946 in Century Small Cap on October 3, 2024 and sell it today you would earn a total of 56.00 from holding Century Small Cap or generate 1.42% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
International Equity Fund vs. Century Small Cap
Performance |
Timeline |
International Equity |
Century Small Cap |
International Equity and Century Small Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with International Equity and Century Small
The main advantage of trading using opposite International Equity and Century Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Equity position performs unexpectedly, Century 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 Century Small will offset losses from the drop in Century Small's long position.International Equity vs. Tfa Alphagen Growth | ||
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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