Correlation Between Small Pany and Short Intermediate

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

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

Diversification Opportunities for Small Pany and Short Intermediate

0.63

Correlation Coefficient

Small Pany  Short Intermediate

Poor diversification

The 3 months correlation between Small and Short is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Small Pany Fund and Short Intermediate Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Intermediate Bond and Small Pany 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 Pany Fund are associated (or correlated) with Short Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Intermediate Bond has no effect on the direction of Small Pany i.e., Small Pany and Short Intermediate go up and down completely randomly.

Pair Corralation between Small Pany and Short Intermediate

Assuming the 90 days horizon Small Pany Fund is expected to generate 8.97 times more return on investment than Short Intermediate. However, Small Pany is 8.97 times more volatile than Short Intermediate Bond Fund. It trades about 0.09 of its potential returns per unit of risk. Short Intermediate Bond Fund is currently generating about 0.2 per unit of risk. If you would invest  2,795  in Small Pany Fund on May 21, 2025 and sell it today you would earn a total of  166.00  from holding Small Pany Fund or generate 5.94% return on investment over 90 days.

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

Small Pany Fund  vs.  Short Intermediate Bond Fund

Small Pany Fund

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Small Pany Fund are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Small Pany may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Short Intermediate Bond

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Short Intermediate Bond Fund are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Short Intermediate 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 Pany and Short Intermediate

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

The idea behind Small Pany Fund and Short Intermediate Bond 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.