Correlation Between Vy Columbia and Smallcap Fund

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

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

Diversification Opportunities for Vy Columbia and Smallcap Fund

0.98

Correlation Coefficient

Vy Columbia  Smallcap Fund

Almost no diversification

The 3 months correlation between VYRDX and Smallcap is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Vy Columbia Small 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 Vy Columbia 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 Vy Columbia Small 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 Vy Columbia i.e., Vy Columbia and Smallcap Fund go up and down completely randomly.

Pair Corralation between Vy Columbia and Smallcap Fund

Assuming the 90 days horizon Vy Columbia Small is expected to under-perform the Smallcap Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, Vy Columbia Small is 1.16 times less risky than Smallcap Fund. The mutual fund trades about -0.1 of its potential returns per unit of risk. The Smallcap Fund Fka is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  2,578  in Smallcap Fund Fka on December 27, 2024 and sell it today you would lose (149.00) from holding Smallcap Fund Fka or give up 5.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Vy Columbia Small  vs.  Smallcap Fund Fka

Vy Columbia Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vy Columbia Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund 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 fairly strong basic indicators, Smallcap Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vy Columbia and Smallcap Fund

The main advantage of trading using opposite Vy Columbia and Smallcap Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vy Columbia 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 Vy Columbia Small 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.