Correlation Between Small Cap and Select Fund
Can any of the company-specific risk be diversified away by investing in both Small Cap and Select 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 Small Cap and Select Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Value and Select Fund A, you can compare the effects of market volatilities on Small Cap and Select 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 Small Cap with a short position of Select Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Select Fund.
Diversification Opportunities for Small Cap and Select Fund
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Small and Select is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Value and Select Fund A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Select Fund A and 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 Small Cap Value are associated (or correlated) with Select Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Select Fund A has no effect on the direction of Small Cap i.e., Small Cap and Select Fund go up and down completely randomly.
Pair Corralation between Small Cap and Select Fund
Assuming the 90 days horizon Small Cap Value is expected to generate 1.59 times more return on investment than Select Fund. However, Small Cap is 1.59 times more volatile than Select Fund A. It trades about 0.12 of its potential returns per unit of risk. Select Fund A is currently generating about 0.15 per unit of risk. If you would invest 955.00 in Small Cap Value on June 6, 2025 and sell it today you would earn a total of 85.00 from holding Small Cap Value or generate 8.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Value vs. Select Fund A
Performance |
| Timeline |
| Small Cap Value |
| Select Fund A |
Small Cap and Select Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Select Fund
The main advantage of trading using opposite Small Cap and Select Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Select 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 Select Fund will offset losses from the drop in Select Fund's long position.| Small Cap vs. Value Fund Investor | Small Cap vs. Small Pany Fund | Small Cap vs. Mid Cap Value | Small Cap vs. Equity Income Fund |
| Select Fund vs. Ultra Fund A | Select Fund vs. International Growth Fund | Select Fund vs. Select Fund I | Select Fund vs. Growth Fund A |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Stocks Directory Find actively traded stocks across global markets | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |