Correlation Between Gavekal Kl and Small Cap

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

By analyzing existing cross correlation between Gavekal Kl Allocation and Small Cap Core, you can compare the effects of market volatilities on Gavekal Kl and Small Cap 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 Gavekal Kl with a short position of Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gavekal Kl and Small Cap.

Diversification Opportunities for Gavekal Kl and Small Cap

0.58

Correlation Coefficient

Gavekal Kl  Small Cap

Very weak diversification

The 3 months correlation between Gavekal and Small is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Gavekal Kl Allocation and Small Cap Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Core and Gavekal Kl 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 Gavekal Kl Allocation are associated (or correlated) with Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Core has no effect on the direction of Gavekal Kl i.e., Gavekal Kl and Small Cap go up and down completely randomly.

Pair Corralation between Gavekal Kl and Small Cap

If you would invest  1,362  in Small Cap Core on June 29, 2024 and sell it today you would earn a total of  34.00  from holding Small Cap Core or generate 2.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	4.55%
Values	Daily Returns

Gavekal Kl Allocation  vs.  Small Cap Core

Gavekal Kl Allocation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gavekal Kl Allocation has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Gavekal Kl is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Small Cap Core

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Small Cap Core are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Small Cap may actually be approaching a critical reversion point that can send shares even higher in October 2024.

Pair Trading with Gavekal Kl and Small Cap

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

The idea behind Gavekal Kl Allocation and Small Cap Core 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.