Correlation Between Smallcap Fund and Evaluator Aggressive

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

By analyzing existing cross correlation between Smallcap Fund Fka and Evaluator Aggressive Rms, you can compare the effects of market volatilities on Smallcap Fund and Evaluator Aggressive 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 Smallcap Fund with a short position of Evaluator Aggressive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Fund and Evaluator Aggressive.

Diversification Opportunities for Smallcap Fund and Evaluator Aggressive

0.55

Correlation Coefficient

Smallcap Fund  Evaluator Aggressive

Very weak diversification

The 3 months correlation between Smallcap and Evaluator is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Fund Fka and Evaluator Aggressive Rms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evaluator Aggressive Rms and Smallcap Fund 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 Smallcap Fund Fka are associated (or correlated) with Evaluator Aggressive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evaluator Aggressive Rms has no effect on the direction of Smallcap Fund i.e., Smallcap Fund and Evaluator Aggressive go up and down completely randomly.

Pair Corralation between Smallcap Fund and Evaluator Aggressive

Assuming the 90 days horizon Smallcap Fund Fka is expected to generate 1.66 times more return on investment than Evaluator Aggressive. However, Smallcap Fund is 1.66 times more volatile than Evaluator Aggressive Rms. It trades about 0.21 of its potential returns per unit of risk. Evaluator Aggressive Rms is currently generating about 0.34 per unit of risk. If you would invest  2,168  in Smallcap Fund Fka on April 24, 2025 and sell it today you would earn a total of  301.00  from holding Smallcap Fund Fka or generate 13.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Smallcap Fund Fka  vs.  Evaluator Aggressive Rms

Smallcap Fund Fka

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Smallcap Fund Fka are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking indicators, Smallcap Fund showed solid returns over the last few months and may actually be approaching a breakup point.

Evaluator Aggressive Rms

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Evaluator Aggressive Rms are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Evaluator Aggressive showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Smallcap Fund and Evaluator Aggressive

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

The idea behind Smallcap Fund Fka and Evaluator Aggressive Rms 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 Transaction History module to view history of all your transactions and understand their impact on performance.