Correlation Between Mid Cap and Real Estate
Can any of the company-specific risk be diversified away by investing in both Mid Cap and Real Estate 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 Mid Cap and Real Estate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mid Cap Value and Real Estate Fund, you can compare the effects of market volatilities on Mid Cap and Real Estate 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 Mid Cap with a short position of Real Estate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Real Estate.
Diversification Opportunities for Mid Cap and Real Estate
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mid and Real is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Value and Real Estate Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Estate Fund and Mid 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 Mid Cap Value are associated (or correlated) with Real Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Estate Fund has no effect on the direction of Mid Cap i.e., Mid Cap and Real Estate go up and down completely randomly.
Pair Corralation between Mid Cap and Real Estate
Assuming the 90 days horizon Mid Cap is expected to generate 4.25 times less return on investment than Real Estate. But when comparing it to its historical volatility, Mid Cap Value is 1.32 times less risky than Real Estate. It trades about 0.01 of its potential returns per unit of risk. Real Estate Fund is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,384 in Real Estate Fund on November 2, 2024 and sell it today you would earn a total of 264.00 from holding Real Estate Fund or generate 11.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mid Cap Value vs. Real Estate Fund
Performance |
| Timeline |
| Mid Cap Value |
| Real Estate Fund |
Mid Cap and Real Estate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid Cap and Real Estate
The main advantage of trading using opposite Mid Cap and Real Estate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap position performs unexpectedly, Real Estate 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 Real Estate will offset losses from the drop in Real Estate's long position.| Mid Cap vs. Heritage Fund Investor | Mid Cap vs. Equity Income Fund | Mid Cap vs. Small Cap Value | Mid Cap vs. Utilities Fund Investor |
| Real Estate vs. Utilities Fund Investor | Real Estate vs. Emerging Markets Fund | Real Estate vs. Heritage Fund Investor | Real Estate vs. Value Fund Investor |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |