Correlation Between Smallcap World and Doubleline Core

Can any of the company-specific risk be diversified away by investing in both Smallcap World and Doubleline Core 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 Doubleline Core 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 Doubleline Core Fixed, you can compare the effects of market volatilities on Smallcap World and Doubleline Core 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 Doubleline Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap World and Doubleline Core.

Diversification Opportunities for Smallcap World and Doubleline Core

0.88

Correlation Coefficient

Smallcap World  Doubleline Core

Very poor diversification

The 3 months correlation between Smallcap and Doubleline is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap World Fund and Doubleline Core Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doubleline Core Fixed 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 Doubleline Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doubleline Core Fixed has no effect on the direction of Smallcap World i.e., Smallcap World and Doubleline Core go up and down completely randomly.

Pair Corralation between Smallcap World and Doubleline Core

Assuming the 90 days horizon Smallcap World Fund is expected to generate 3.02 times more return on investment than Doubleline Core. However, Smallcap World is 3.02 times more volatile than Doubleline Core Fixed. It trades about 0.19 of its potential returns per unit of risk. Doubleline Core Fixed is currently generating about 0.19 per unit of risk. If you would invest  6,946  in Smallcap World Fund on May 26, 2025 and sell it today you would earn a total of  638.00  from holding Smallcap World Fund or generate 9.19% return on investment over 90 days.

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

Smallcap World Fund  vs.  Doubleline Core Fixed

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 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Smallcap World may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Doubleline Core Fixed

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Doubleline Core Fixed are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Doubleline Core 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 Doubleline Core

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

The idea behind Smallcap World Fund and Doubleline Core Fixed 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.