Correlation Between Mid Cap and Growth Fund
Can any of the company-specific risk be diversified away by investing in both Mid Cap and Growth Fund 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 Growth Fund 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 Growth Fund I, you can compare the effects of market volatilities on Mid Cap and Growth Fund 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 Growth Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Growth Fund.
Diversification Opportunities for Mid Cap and Growth Fund
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mid and Growth is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Value and Growth Fund I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Fund I 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 Growth Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Fund I has no effect on the direction of Mid Cap i.e., Mid Cap and Growth Fund go up and down completely randomly.
Pair Corralation between Mid Cap and Growth Fund
Assuming the 90 days horizon Mid Cap Value is expected to under-perform the Growth Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, Mid Cap Value is 1.16 times less risky than Growth Fund. The mutual fund trades about -0.15 of its potential returns per unit of risk. The Growth Fund I is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 6,411 in Growth Fund I on November 3, 2024 and sell it today you would lose (284.00) from holding Growth Fund I or give up 4.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mid Cap Value vs. Growth Fund I
Performance |
| Timeline |
| Mid Cap Value |
| Growth Fund I |
Mid Cap and Growth Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid Cap and Growth Fund
The main advantage of trading using opposite Mid Cap and Growth Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap position performs unexpectedly, Growth Fund 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 Growth Fund will offset losses from the drop in Growth Fund's long position.| Mid Cap vs. Janus Triton Fund | Mid Cap vs. New World Fund | Mid Cap vs. Fidelity Mid Cap | Mid Cap vs. Mfs Value Fund |
| Growth Fund vs. New Perspective Fund | Growth Fund vs. Investment Of America | Growth Fund vs. Virtus Emerging Markets | Growth Fund vs. Oak Ridge Small |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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