Small Cap Correlations
| VSSVX Fund | USD 11.91 0.22 1.81% |
The correlation of Small Cap is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as Small Cap moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Small Cap Special moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Very poor diversification
The correlation between Small Cap Special and NYA is 0.86 (i.e., Very poor diversification) for selected investment horizon. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Special and NYA in the same portfolio, assuming nothing else is changed.
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The ability to find closely correlated positions to Small Cap could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Small Cap when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back Small Cap - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling Small Cap Special to buy it.
Moving together with Small Mutual Fund
| 0.97 | VMIDX | Mid Cap Index | PairCorr |
| 0.86 | VMSGX | Mid Cap Strategic | PairCorr |
| 0.71 | VAPPX | Valic Company I | PairCorr |
| 0.92 | VSRDX | Valic Company I | PairCorr |
| 0.95 | VBCVX | Broad Cap Value | PairCorr |
| 0.88 | VCAAX | Asset Allocation | PairCorr |
| 0.73 | VCBCX | Blue Chip Growth | PairCorr |
| 0.87 | VCGAX | Growth Me Fund | PairCorr |
| 0.79 | VCGEX | Emerging Economies | PairCorr |
| 0.84 | VCIEX | International Equities | PairCorr |
| 0.65 | VCSTX | Science Technology | PairCorr |
| 0.81 | VCSOX | Global Social Awareness | PairCorr |
Related Correlations Analysis
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Risk-Adjusted Indicators
There is a big difference between Small Mutual Fund performing well and Small Cap Mutual Fund doing well as a business compared to the competition. There are so many exceptions to the norm that investors cannot definitively determine what's good or bad unless they analyze Small Cap's multiple risk-adjusted performance indicators across the competitive landscape. These indicators are quantitative in nature and help investors forecast volatility and risk-adjusted expected returns across various positions.Be your own money manager
Our tools can tell you how much better you can do entering a position in Small Cap without increasing your portfolio risk or giving up the expected return. As an individual investor, you need to find a reliable way to track all your investment portfolios. However, your requirements will often be based on how much of the process you decide to do yourself. In addition to allowing all investors analytical transparency into all their portfolios, our tools can evaluate risk-adjusted returns of your individual positions relative to your overall portfolio.Did you try this?
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Already Invested in Small Cap Special?
The danger of trading Small Cap Special is mainly related to its market volatility and Mutual Fund specific events. As an investor, you must understand the concept of risk-adjusted return before you start trading. The most common way to measure the risk of Small Cap is by using the Sharpe ratio. The ratio expresses how much excess return you acquire for the extra volatility you endure for holding a more risker asset than Small Cap. The Sharpe ratio is calculated by using standard deviation and excess return to determine reward per unit of risk. To understand how volatile Small Cap Special is, you must compare it to a benchmark. Traditionally, the risk-free rate of return is the rate of return on the shortest-dated U.S. Treasury, such as a 3-year bond.
Check out World Market Map to better understand how to build diversified portfolios, which includes a position in Small Cap Special. Also, note that the market value of any mutual fund could be tightly coupled with the direction of predictive economic indicators such as signals in real. You can also try the Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.