Correlation Between Perkins Small and Select Fund

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

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

Diversification Opportunities for Perkins Small and Select Fund

0.87

Correlation Coefficient

Perkins Small  Select Fund

Very poor diversification

The 3 months correlation between Perkins and Select is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Perkins Small Cap and Select Fund C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Select Fund C and Perkins 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 Perkins Small Cap are associated (or correlated) with Select Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Select Fund C has no effect on the direction of Perkins Small i.e., Perkins Small and Select Fund go up and down completely randomly.

Pair Corralation between Perkins Small and Select Fund

Assuming the 90 days horizon Perkins Small is expected to generate 2.15 times less return on investment than Select Fund. In addition to that, Perkins Small is 1.26 times more volatile than Select Fund C. It trades about 0.06 of its total potential returns per unit of risk. Select Fund C is currently generating about 0.17 per unit of volatility. If you would invest  8,883  in Select Fund C on May 14, 2025 and sell it today you would earn a total of  812.00  from holding Select Fund C or generate 9.14% return on investment over 90 days.

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

Perkins Small Cap  vs.  Select Fund C

Perkins Small Cap

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Perkins Small Cap are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Perkins Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Select Fund C

Risk-Adjusted Performance

Good

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

Pair Trading with Perkins Small and Select Fund

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

The idea behind Perkins Small Cap and Select Fund C 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.