Correlation Between Century Small and Congress Large
Can any of the company-specific risk be diversified away by investing in both Century Small and Congress Large 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 Century Small and Congress Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Small Cap and Congress Large Cap, you can compare the effects of market volatilities on Century Small and Congress Large 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 Century Small with a short position of Congress Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Small and Congress Large.
Diversification Opportunities for Century Small and Congress Large
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Century and Congress is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Century Small Cap and Congress Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Congress Large Cap and Century Small 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 Century Small Cap are associated (or correlated) with Congress Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Congress Large Cap has no effect on the direction of Century Small i.e., Century Small and Congress Large go up and down completely randomly.
Pair Corralation between Century Small and Congress Large
Assuming the 90 days horizon Century Small is expected to generate 1.12 times less return on investment than Congress Large. In addition to that, Century Small is 1.52 times more volatile than Congress Large Cap. It trades about 0.28 of its total potential returns per unit of risk. Congress Large Cap is currently generating about 0.48 per unit of volatility. If you would invest 4,696 in Congress Large Cap on April 21, 2025 and sell it today you would earn a total of 305.00 from holding Congress Large Cap or generate 6.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Century Small Cap vs. Congress Large Cap
Performance |
| Timeline |
| Century Small Cap |
| Congress Large Cap |
Century Small and Congress Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Small and Congress Large
The main advantage of trading using opposite Century Small and Congress Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Small position performs unexpectedly, Congress Large 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 Congress Large will offset losses from the drop in Congress Large's long position.| Century Small vs. Third Avenue Real | Century Small vs. Aegis Value Fund | Century Small vs. Litman Gregory Masters | Century Small vs. Marsico Growth Fund |
| Congress Large vs. Great West Inflation Protected Securities | Congress Large vs. Lord Abbett Inflation | Congress Large vs. Atac Inflation Rotation | Congress Large vs. Ab Bond Inflation |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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