Correlation Between Us Small and Pace Smallmedium

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

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

Diversification Opportunities for Us Small and Pace Smallmedium

0.99

Correlation Coefficient

Us Small  Pace Smallmedium

No risk reduction

The 3 months correlation between DFSVX and Pace is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Us Small Cap and Pace Smallmedium Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace Smallmedium Value and Us Small 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 Us Small Cap are associated (or correlated) with Pace Smallmedium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace Smallmedium Value has no effect on the direction of Us Small i.e., Us Small and Pace Smallmedium go up and down completely randomly.

Pair Corralation between Us Small and Pace Smallmedium

Assuming the 90 days horizon Us Small Cap is expected to generate 1.06 times more return on investment than Pace Smallmedium. However, Us Small is 1.06 times more volatile than Pace Smallmedium Value. It trades about 0.12 of its potential returns per unit of risk. Pace Smallmedium Value is currently generating about 0.12 per unit of risk. If you would invest  4,312  in Us Small Cap on May 2, 2025 and sell it today you would earn a total of  393.00  from holding Us Small Cap or generate 9.11% return on investment over 90 days.

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

Us Small Cap  vs.  Pace Smallmedium Value

Us Small Cap

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Us Small Cap are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Us Small may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pace Smallmedium Value

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pace Smallmedium Value are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Pace Smallmedium may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Us Small and Pace Smallmedium

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

The idea behind Us Small Cap and Pace Smallmedium Value 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.