Correlation Between Real Assets and Small-cap Growth

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

By analyzing existing cross correlation between Real Assets Portfolio and Small Cap Growth Profund, you can compare the effects of market volatilities on Real Assets and Small-cap Growth 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 Real Assets with a short position of Small-cap Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Real Assets and Small-cap Growth.

Diversification Opportunities for Real Assets and Small-cap Growth

0.0

Correlation Coefficient

Real Assets  Small-cap Growth

Pay attention - limited upside

The 3 months correlation between Real and SMALL-CAP is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Real Assets Portfolio and Small Cap Growth Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Growth and Real Assets 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 Real Assets Portfolio are associated (or correlated) with Small-cap Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Growth has no effect on the direction of Real Assets i.e., Real Assets and Small-cap Growth go up and down completely randomly.

Pair Corralation between Real Assets and Small-cap Growth

If you would invest  10,586  in Small Cap Growth Profund on May 17, 2025 and sell it today you would earn a total of  534.00  from holding Small Cap Growth Profund or generate 5.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Real Assets Portfolio  vs.  Small Cap Growth Profund

Real Assets Portfolio

Risk-Adjusted Performance

Weakest

Over the last 90 days Real Assets Portfolio has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Real Assets is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Small Cap Growth

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Small Cap Growth Profund are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Small-cap Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Real Assets and Small-cap Growth

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

The idea behind Real Assets Portfolio and Small Cap Growth Profund 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.