Correlation Between Smallcap Fund and Tfa Quantitative

Can any of the company-specific risk be diversified away by investing in both Smallcap Fund and Tfa Quantitative 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 Tfa Quantitative 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 Tfa Quantitative, you can compare the effects of market volatilities on Smallcap Fund and Tfa Quantitative 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 Tfa Quantitative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Fund and Tfa Quantitative.

Diversification Opportunities for Smallcap Fund and Tfa Quantitative

0.7

Correlation Coefficient

Smallcap Fund  Tfa Quantitative

Poor diversification

The 3 months correlation between Smallcap and Tfa is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Fund Fka and Tfa Quantitative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tfa Quantitative 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 Tfa Quantitative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tfa Quantitative has no effect on the direction of Smallcap Fund i.e., Smallcap Fund and Tfa Quantitative go up and down completely randomly.

Pair Corralation between Smallcap Fund and Tfa Quantitative

Assuming the 90 days horizon Smallcap Fund Fka is expected to generate 1.34 times more return on investment than Tfa Quantitative. However, Smallcap Fund is 1.34 times more volatile than Tfa Quantitative. It trades about 0.18 of its potential returns per unit of risk. Tfa Quantitative is currently generating about 0.21 per unit of risk. If you would invest  2,475  in Smallcap Fund Fka on May 16, 2025 and sell it today you would earn a total of  262.00  from holding Smallcap Fund Fka or generate 10.59% return on investment over 90 days.

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

Smallcap Fund Fka  vs.  Tfa Quantitative

Smallcap Fund Fka

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Smallcap Fund Fka are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Smallcap Fund may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Tfa Quantitative

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tfa Quantitative are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Tfa Quantitative may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Smallcap Fund and Tfa Quantitative

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

The idea behind Smallcap Fund Fka and Tfa Quantitative 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.