Correlation Between Small Cap and Annexon
Can any of the company-specific risk be diversified away by investing in both Small Cap and Annexon 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 and Annexon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Core and Annexon, you can compare the effects of market volatilities on Small Cap and Annexon 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 with a short position of Annexon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Annexon.
Diversification Opportunities for Small Cap and Annexon
Very weak diversification
The 3 months correlation between Small and Annexon is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Core and Annexon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Annexon and Small Cap 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 Core are associated (or correlated) with Annexon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Annexon has no effect on the direction of Small Cap i.e., Small Cap and Annexon go up and down completely randomly.
Pair Corralation between Small Cap and Annexon
Assuming the 90 days horizon Small Cap Core is expected to generate 0.17 times more return on investment than Annexon. However, Small Cap Core is 5.92 times less risky than Annexon. It trades about -0.05 of its potential returns per unit of risk. Annexon is currently generating about -0.05 per unit of risk. If you would invest 1,324 in Small Cap Core on March 31, 2024 and sell it today you would lose (48.00) from holding Small Cap Core or give up 3.63% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Small Cap Core vs. Annexon
Performance |
Timeline |
Small Cap Core |
Annexon |
Small Cap and Annexon Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Small Cap and Annexon
The main advantage of trading using opposite Small Cap and Annexon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Annexon 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 Annexon will offset losses from the drop in Annexon's long position.Small Cap vs. Ab Global E | Small Cap vs. Ab Global E | Small Cap vs. Ab Global E | Small Cap vs. Ab Minnesota Portfolio |
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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.
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