Correlation Between Small-cap Value and Msift High

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

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

Diversification Opportunities for Small-cap Value and Msift High

0.54

Correlation Coefficient

Small-cap Value  Msift High

Very weak diversification

The 3 months correlation between Small-cap and Msift is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Value Profund and Msift High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Msift High Yield and Small-cap Value 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 Profund are associated (or correlated) with Msift High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Msift High Yield has no effect on the direction of Small-cap Value i.e., Small-cap Value and Msift High go up and down completely randomly.

Pair Corralation between Small-cap Value and Msift High

Assuming the 90 days horizon Small Cap Value Profund is expected to generate 10.31 times more return on investment than Msift High. However, Small-cap Value is 10.31 times more volatile than Msift High Yield. It trades about 0.17 of its potential returns per unit of risk. Msift High Yield is currently generating about 0.5 per unit of risk. If you would invest  9,676  in Small Cap Value Profund on May 28, 2025 and sell it today you would earn a total of  1,316  from holding Small Cap Value Profund or generate 13.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Small Cap Value Profund  vs.  Msift High Yield

Small Cap Value

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Small Cap Value Profund are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Small-cap Value showed solid returns over the last few months and may actually be approaching a breakup point.

Msift High Yield

Risk-Adjusted Performance

High

Compared to the overall equity markets, risk-adjusted returns on investments in Msift High Yield are ranked lower than 39 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Msift High 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 Value and Msift High

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

The idea behind Small Cap Value Profund and Msift High Yield 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.