Correlation Between Tortoise Energy and Smallcap World

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

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

Diversification Opportunities for Tortoise Energy and Smallcap World

0.82

Correlation Coefficient

Tortoise Energy  Smallcap World

Very poor diversification

The 3 months correlation between Tortoise and Smallcap is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Tortoise Energy Infrastructure and Smallcap World Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smallcap World and Tortoise Energy 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 Tortoise Energy Infrastructure are associated (or correlated) with Smallcap World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smallcap World has no effect on the direction of Tortoise Energy i.e., Tortoise Energy and Smallcap World go up and down completely randomly.

Pair Corralation between Tortoise Energy and Smallcap World

Assuming the 90 days horizon Tortoise Energy is expected to generate 2.11 times less return on investment than Smallcap World. In addition to that, Tortoise Energy is 1.37 times more volatile than Smallcap World Fund. It trades about 0.11 of its total potential returns per unit of risk. Smallcap World Fund is currently generating about 0.32 per unit of volatility. If you would invest  5,853  in Smallcap World Fund on April 23, 2025 and sell it today you would earn a total of  959.00  from holding Smallcap World Fund or generate 16.38% return on investment over 90 days.

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

Tortoise Energy Infrastructure  vs.  Smallcap World Fund

Tortoise Energy Infr

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tortoise Energy Infrastructure are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Tortoise Energy may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Smallcap World

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Smallcap World Fund are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Smallcap World showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tortoise Energy and Smallcap World

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

The idea behind Tortoise Energy Infrastructure and Smallcap World Fund 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.