Correlation Between Strategic Allocation and Yorktown Small

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

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

Diversification Opportunities for Strategic Allocation and Yorktown Small

0.95

Correlation Coefficient

Strategic Allocation  Yorktown Small

Almost no diversification

The 3 months correlation between Strategic and Yorktown is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Allocation Moderate and Yorktown Small Cap Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yorktown Small Cap and Strategic Allocation 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 Strategic Allocation Moderate are associated (or correlated) with Yorktown Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yorktown Small Cap has no effect on the direction of Strategic Allocation i.e., Strategic Allocation and Yorktown Small go up and down completely randomly.

Pair Corralation between Strategic Allocation and Yorktown Small

Assuming the 90 days horizon Strategic Allocation is expected to generate 1.64 times less return on investment than Yorktown Small. But when comparing it to its historical volatility, Strategic Allocation Moderate is 2.03 times less risky than Yorktown Small. It trades about 0.24 of its potential returns per unit of risk. Yorktown Small Cap Fund is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,557  in Yorktown Small Cap Fund on May 3, 2025 and sell it today you would earn a total of  176.00  from holding Yorktown Small Cap Fund or generate 11.3% return on investment over 90 days.

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

Strategic Allocation Moderate  vs.  Yorktown Small Cap Fund

Strategic Allocation

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Strategic Allocation Moderate are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Strategic Allocation may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Yorktown Small Cap

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Yorktown Small Cap Fund are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Yorktown Small may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Strategic Allocation and Yorktown Small

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

The idea behind Strategic Allocation Moderate and Yorktown Small Cap Fund 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.