Correlation Between Perkins Small and Capital Management

Can any of the company-specific risk be diversified away by investing in both Perkins Small and Capital Management 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 Capital Management 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 Capital Management Mid Cap, you can compare the effects of market volatilities on Perkins Small and Capital Management 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 Capital Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perkins Small and Capital Management.

Diversification Opportunities for Perkins Small and Capital Management

0.92

Correlation Coefficient

Perkins Small  Capital Management

Almost no diversification

The 3 months correlation between Perkins and Capital is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Perkins Small Cap and Capital Management Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Management Mid 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 Capital Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Management Mid has no effect on the direction of Perkins Small i.e., Perkins Small and Capital Management go up and down completely randomly.

Pair Corralation between Perkins Small and Capital Management

Assuming the 90 days horizon Perkins Small Cap is expected to generate 1.18 times more return on investment than Capital Management. However, Perkins Small is 1.18 times more volatile than Capital Management Mid Cap. It trades about 0.08 of its potential returns per unit of risk. Capital Management Mid Cap is currently generating about 0.05 per unit of risk. If you would invest  2,024  in Perkins Small Cap on May 3, 2025 and sell it today you would earn a total of  112.00  from holding Perkins Small Cap or generate 5.53% return on investment over 90 days.

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

Perkins Small Cap  vs.  Capital Management Mid Cap

Perkins Small Cap

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Perkins Small Cap are ranked lower than 6 (%) 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.

Capital Management Mid

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Management Mid Cap are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Capital Management is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Perkins Small and Capital Management

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

The idea behind Perkins Small Cap and Capital Management Mid Cap 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.