Correlation Between Value Fund and Small Cap
Can any of the company-specific risk be diversified away by investing in both Value Fund and 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 Value Fund and Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Value Fund A and Small Cap Growth, you can compare the effects of market volatilities on Value Fund and 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 Value Fund with a short position of Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Value Fund and Small Cap.
Diversification Opportunities for Value Fund and Small Cap
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Value and SMALL is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Value Fund A and Small Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Growth and Value Fund 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 Value Fund A are associated (or correlated) with 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 Small Cap Growth has no effect on the direction of Value Fund i.e., Value Fund and Small Cap go up and down completely randomly.
Pair Corralation between Value Fund and Small Cap
Assuming the 90 days horizon Value Fund A is expected to generate 0.54 times more return on investment than Small Cap. However, Value Fund A is 1.87 times less risky than Small Cap. It trades about 0.12 of its potential returns per unit of risk. Small Cap Growth is currently generating about 0.04 per unit of risk. If you would invest 807.00 in Value Fund A on July 19, 2025 and sell it today you would earn a total of 38.00 from holding Value Fund A or generate 4.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Value Fund A vs. Small Cap Growth
Performance |
| Timeline |
| Value Fund A |
| Small Cap Growth |
Value Fund and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Value Fund and Small Cap
The main advantage of trading using opposite Value Fund and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Value Fund position performs unexpectedly, 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 Small Cap will offset losses from the drop in Small Cap's long position.| Value Fund vs. Prudential Qma Large Cap | Value Fund vs. Siit Large Cap | Value Fund vs. Pace Large Value | Value Fund vs. Fundamental Large Cap |
| Small Cap vs. James Balanced Golden | Small Cap vs. World Precious Minerals | Small Cap vs. Gold And Precious | Small Cap vs. Global Gold Fund |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |