Correlation Between Smallcap World and Strategic Advisers

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

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

Diversification Opportunities for Smallcap World and Strategic Advisers

0.95

Correlation Coefficient

Smallcap World  Strategic Advisers

Almost no diversification

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

Pair Corralation between Smallcap World and Strategic Advisers

Assuming the 90 days horizon Smallcap World Fund is expected to under-perform the Strategic Advisers. In addition to that, Smallcap World is 5.2 times more volatile than Strategic Advisers Income. It trades about -0.05 of its total potential returns per unit of risk. Strategic Advisers Income is currently generating about 0.2 per unit of volatility. If you would invest  886.00  in Strategic Advisers Income on May 8, 2025 and sell it today you would earn a total of  6.00  from holding Strategic Advisers Income or generate 0.68% return on investment over 90 days.

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

Smallcap World Fund  vs.  Strategic Advisers Income

Smallcap World

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Smallcap World Fund are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Smallcap World may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Strategic Advisers Income

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Strategic Advisers Income are ranked lower than 27 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Strategic Advisers is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Smallcap World and Strategic Advisers

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

The idea behind Smallcap World Fund and Strategic Advisers Income 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..