Correlation Between Smallcap World and Alpsred Rocks

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

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

Diversification Opportunities for Smallcap World and Alpsred Rocks

0.58

Correlation Coefficient

Smallcap World  Alpsred Rocks

Very weak diversification

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

Pair Corralation between Smallcap World and Alpsred Rocks

Assuming the 90 days horizon Smallcap World Fund is expected to generate 0.89 times more return on investment than Alpsred Rocks. However, Smallcap World Fund is 1.12 times less risky than Alpsred Rocks. It trades about 0.13 of its potential returns per unit of risk. Alpsred Rocks Listed is currently generating about 0.01 per unit of risk. If you would invest  6,921  in Smallcap World Fund on September 5, 2025 and sell it today you would earn a total of  190.00  from holding Smallcap World Fund or generate 2.75% return on investment over 90 days.

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

Smallcap World Fund  vs.  Alpsred Rocks Listed

Smallcap World

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Smallcap World Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Smallcap World is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Alpsred Rocks Listed

Risk-Adjusted Performance

Weakest

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

Pair Trading with Smallcap World and Alpsred Rocks

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

The idea behind Smallcap World Fund and Alpsred Rocks Listed 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.