Correlation Between Zacks Small-cap and Zacks Small-cap

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

By analyzing existing cross correlation between Zacks Small Cap E and Zacks Small Cap E, you can compare the effects of market volatilities on Zacks Small-cap and Zacks Small-cap 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 Zacks Small-cap with a short position of Zacks Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zacks Small-cap and Zacks Small-cap.

Diversification Opportunities for Zacks Small-cap and Zacks Small-cap

1.0

Correlation Coefficient

Zacks Small-cap  Zacks Small-cap

No risk reduction

The 3 months correlation between Zacks and Zacks is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Zacks Small Cap E and Zacks Small Cap E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zacks Small Cap and Zacks 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 Zacks Small Cap E are associated (or correlated) with Zacks Small-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zacks Small Cap has no effect on the direction of Zacks Small-cap i.e., Zacks Small-cap and Zacks Small-cap go up and down completely randomly.

Pair Corralation between Zacks Small-cap and Zacks Small-cap

Assuming the 90 days horizon Zacks Small Cap E is expected to under-perform the Zacks Small-cap. But the mutual fund apears to be less risky and, when comparing its historical volatility, Zacks Small Cap E is 1.0 times less risky than Zacks Small-cap. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Zacks Small Cap E is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  3,133  in Zacks Small Cap E on December 28, 2024 and sell it today you would lose (194.00) from holding Zacks Small Cap E or give up 6.19% of portfolio value over 90 days.

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

Zacks Small Cap E  vs.  Zacks Small Cap E

Zacks Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zacks Small Cap E 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.

Zacks Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zacks Small Cap E has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Zacks Small-cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Zacks Small-cap and Zacks Small-cap

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

The idea behind Zacks Small Cap E and Zacks Small Cap E 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.