Correlation Between Applied Finance and Mid-cap Value
Can any of the company-specific risk be diversified away by investing in both Applied Finance and Mid-cap Value 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 Applied Finance and Mid-cap Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Finance Explorer and Mid Cap Value Profund, you can compare the effects of market volatilities on Applied Finance and Mid-cap Value 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 Applied Finance with a short position of Mid-cap Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Finance and Mid-cap Value.
Diversification Opportunities for Applied Finance and Mid-cap Value
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Applied and Mid-cap is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Applied Finance Explorer and Mid Cap Value Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Cap Value and Applied Finance 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 Applied Finance Explorer are associated (or correlated) with Mid-cap Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Cap Value has no effect on the direction of Applied Finance i.e., Applied Finance and Mid-cap Value go up and down completely randomly.
Pair Corralation between Applied Finance and Mid-cap Value
Assuming the 90 days horizon Applied Finance Explorer is expected to generate 1.35 times more return on investment than Mid-cap Value. However, Applied Finance is 1.35 times more volatile than Mid Cap Value Profund. It trades about 0.21 of its potential returns per unit of risk. Mid Cap Value Profund is currently generating about 0.25 per unit of risk. If you would invest 2,173 in Applied Finance Explorer on October 23, 2024 and sell it today you would earn a total of 82.00 from holding Applied Finance Explorer or generate 3.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Finance Explorer vs. Mid Cap Value Profund
Performance |
| Timeline |
| Applied Finance Explorer |
| Mid Cap Value |
Applied Finance and Mid-cap Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Finance and Mid-cap Value
The main advantage of trading using opposite Applied Finance and Mid-cap Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Finance position performs unexpectedly, Mid-cap Value 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 Mid-cap Value will offset losses from the drop in Mid-cap Value's long position.| Applied Finance vs. Thrivent Small Cap | Applied Finance vs. Applied Finance Select | Applied Finance vs. Parnassus Endeavor Fund | Applied Finance vs. Queens Road Small |
| Mid-cap Value vs. Wells Fargo Diversified | Mid-cap Value vs. Guidepath Conservative Income | Mid-cap Value vs. Tiaa Cref Lifestyle Conservative | Mid-cap Value vs. Jhancock Diversified Macro |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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