Correlation Between Small-cap Value and Multi-manager Directional

Can any of the company-specific risk be diversified away by investing in both Small-cap Value and Multi-manager Directional 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 Value and Multi-manager Directional into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Small Cap Value Profund and Multi Manager Directional Alternative, you can compare the effects of market volatilities on Small-cap Value and Multi-manager Directional 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 Value with a short position of Multi-manager Directional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small-cap Value and Multi-manager Directional.

Diversification Opportunities for Small-cap Value and Multi-manager Directional

-0.19

Correlation Coefficient

Small-cap Value  Multi-manager Directional

Good diversification

The 3 months correlation between SMALL-CAP and Multi-manager is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Value Profund and Multi Manager Directional Alte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi-manager Directional and Small-cap Value 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 Value Profund are associated (or correlated) with Multi-manager Directional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi-manager Directional has no effect on the direction of Small-cap Value i.e., Small-cap Value and Multi-manager Directional go up and down completely randomly.

Pair Corralation between Small-cap Value and Multi-manager Directional

Assuming the 90 days horizon Small Cap Value Profund is expected to under-perform the Multi-manager Directional. In addition to that, Small-cap Value is 2.12 times more volatile than Multi Manager Directional Alternative. It trades about 0.0 of its total potential returns per unit of risk. Multi Manager Directional Alternative is currently generating about 0.26 per unit of volatility. If you would invest  789.00  in Multi Manager Directional Alternative on August 27, 2025 and sell it today you would earn a total of  77.00  from holding Multi Manager Directional Alternative or generate 9.76% return on investment over 90 days.

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

Small Cap Value Profund  vs.  Multi Manager Directional Alte

Small Cap Value

Risk-Adjusted Performance

Weakest

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

Multi-manager Directional

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Manager Directional Alternative are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Multi-manager Directional may actually be approaching a critical reversion point that can send shares even higher in December 2025.

Pair Trading with Small-cap Value and Multi-manager Directional

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

The idea behind Small Cap Value Profund and Multi Manager Directional Alternative 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.