Correlation Between Small Cap and Buffalo High

Can any of the company-specific risk be diversified away by investing in both Small Cap and Buffalo High 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 Buffalo High 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 Buffalo High Yield, you can compare the effects of market volatilities on Small Cap and Buffalo High 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 Buffalo High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Buffalo High.

Diversification Opportunities for Small Cap and Buffalo High

0.0

Correlation Coefficient

Small Cap  Buffalo High

Pay attention - limited upside

The 3 months correlation between Small and Buffalo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Value and Buffalo High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buffalo High Yield 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 Buffalo High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buffalo High Yield has no effect on the direction of Small Cap i.e., Small Cap and Buffalo High go up and down completely randomly.

Pair Corralation between Small Cap and Buffalo High

If you would invest  897.00  in Buffalo High Yield on July 25, 2025 and sell it today you would earn a total of  163.00  from holding Buffalo High Yield or generate 18.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Small Cap Value  vs.  Buffalo High Yield

Small Cap Value

Risk-Adjusted Performance

Weakest

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

Buffalo High Yield

Risk-Adjusted Performance

Weakest

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

Pair Trading with Small Cap and Buffalo High

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

The idea behind Small Cap Value and Buffalo High Yield 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.