Correlation Between Strategic Asset and International Small

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

By analyzing existing cross correlation between Strategic Asset Management and International Small Pany, you can compare the effects of market volatilities on Strategic Asset and International Small 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 Strategic Asset with a short position of International Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Asset and International Small.

Diversification Opportunities for Strategic Asset and International Small

0.95

Correlation Coefficient

Strategic Asset  International Small

Almost no diversification

The 3 months correlation between Strategic and International is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Asset Management and International Small Pany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Small Pany and Strategic Asset 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 Strategic Asset Management are associated (or correlated) with International Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Small Pany has no effect on the direction of Strategic Asset i.e., Strategic Asset and International Small go up and down completely randomly.

Pair Corralation between Strategic Asset and International Small

Assuming the 90 days horizon Strategic Asset Management is expected to generate 0.79 times more return on investment than International Small. However, Strategic Asset Management is 1.26 times less risky than International Small. It trades about 0.12 of its potential returns per unit of risk. International Small Pany is currently generating about 0.07 per unit of risk. If you would invest  1,776  in Strategic Asset Management on January 31, 2024 and sell it today you would earn a total of  98.00  from holding Strategic Asset Management or generate 5.52% return on investment over 90 days.

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

Strategic Asset Management  vs.  International Small Pany

Strategic Asset Mana

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Strategic Asset Management are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Strategic Asset is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

International Small Pany

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in International Small Pany are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, International Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Strategic Asset and International Small

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

The idea behind Strategic Asset Management and International Small Pany 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.