Correlation Between Cb Large and Small Company

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

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

Diversification Opportunities for Cb Large and Small Company

0.1

Correlation Coefficient

Cb Large  Small Company

Average diversification

The 3 months correlation between CBLLX and Small is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Cb Large Cap and Small Pany Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Pany Fund and Cb Large 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 Cb Large Cap are associated (or correlated) with Small Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Pany Fund has no effect on the direction of Cb Large i.e., Cb Large and Small Company go up and down completely randomly.

Pair Corralation between Cb Large and Small Company

Assuming the 90 days horizon Cb Large is expected to generate 1.31 times less return on investment than Small Company. But when comparing it to its historical volatility, Cb Large Cap is 2.44 times less risky than Small Company. It trades about 0.14 of its potential returns per unit of risk. Small Pany Fund is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,691  in Small Pany Fund on August 15, 2025 and sell it today you would earn a total of  90.00  from holding Small Pany Fund or generate 5.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	57.14%
Values	Daily Returns

Cb Large Cap  vs.  Small Pany Fund

Cb Large Cap

Risk-Adjusted Performance

Good

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

Small Pany Fund

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Small Pany Fund are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Small Company is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cb Large and Small Company

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

The idea behind Cb Large Cap and Small Pany 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.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.