Correlation Between High-yield Fund and Sp Midcap
Can any of the company-specific risk be diversified away by investing in both High-yield Fund and Sp Midcap 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 High-yield Fund and Sp Midcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Yield Fund R6 and Sp Midcap Index, you can compare the effects of market volatilities on High-yield Fund and Sp Midcap 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 High-yield Fund with a short position of Sp Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of High-yield Fund and Sp Midcap.
Diversification Opportunities for High-yield Fund and Sp Midcap
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between High-yield and SPMIX is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Fund R6 and Sp Midcap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sp Midcap Index and High-yield Fund 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 High Yield Fund R6 are associated (or correlated) with Sp Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sp Midcap Index has no effect on the direction of High-yield Fund i.e., High-yield Fund and Sp Midcap go up and down completely randomly.
Pair Corralation between High-yield Fund and Sp Midcap
Assuming the 90 days horizon High-yield Fund is expected to generate 12.07 times less return on investment than Sp Midcap. But when comparing it to its historical volatility, High Yield Fund R6 is 7.02 times less risky than Sp Midcap. It trades about 0.15 of its potential returns per unit of risk. Sp Midcap Index is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 2,795 in Sp Midcap Index on August 31, 2024 and sell it today you would earn a total of 202.00 from holding Sp Midcap Index or generate 7.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Yield Fund R6 vs. Sp Midcap Index
Performance |
| Timeline |
| High Yield Fund |
| Sp Midcap Index |
High-yield Fund and Sp Midcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High-yield Fund and Sp Midcap
The main advantage of trading using opposite High-yield Fund and Sp Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High-yield Fund position performs unexpectedly, Sp Midcap 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 Sp Midcap will offset losses from the drop in Sp Midcap's long position.| High-yield Fund vs. Sp Midcap Index | High-yield Fund vs. Calvert Developed Market | High-yield Fund vs. Vanguard Developed Markets | High-yield Fund vs. Origin Emerging Markets |
| Sp Midcap vs. Fpa Queens Road | Sp Midcap vs. Royce Opportunity Fund | Sp Midcap vs. Lord Abbett Small | Sp Midcap vs. Amg River Road |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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