Correlation Between Small Cap and Alpine Dynamic

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

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

Diversification Opportunities for Small Cap and Alpine Dynamic

0.77

Correlation Coefficient

Small Cap  Alpine Dynamic

Poor diversification

The 3 months correlation between Small and Alpine is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Value Series and Alpine Dynamic Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpine Dynamic Dividend and Small Cap 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 Cap Value Series are associated (or correlated) with Alpine Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpine Dynamic Dividend has no effect on the direction of Small Cap i.e., Small Cap and Alpine Dynamic go up and down completely randomly.

Pair Corralation between Small Cap and Alpine Dynamic

Assuming the 90 days horizon Small Cap is expected to generate 1.2 times less return on investment than Alpine Dynamic. In addition to that, Small Cap is 1.71 times more volatile than Alpine Dynamic Dividend. It trades about 0.04 of its total potential returns per unit of risk. Alpine Dynamic Dividend is currently generating about 0.09 per unit of volatility. If you would invest  344.00  in Alpine Dynamic Dividend on June 29, 2025 and sell it today you would earn a total of  129.00  from holding Alpine Dynamic Dividend or generate 37.5% return on investment over 90 days.

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

Small Cap Value Series  vs.  Alpine Dynamic Dividend

Small Cap Value

Risk-Adjusted Performance

Soft

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

Alpine Dynamic Dividend

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alpine Dynamic Dividend are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Alpine Dynamic 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 Cap and Alpine Dynamic

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

The idea behind Small Cap Value Series and Alpine Dynamic Dividend 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.