Correlation Between Mid Cap and Focused International
Can any of the company-specific risk be diversified away by investing in both Mid Cap and Focused International 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 Focused International 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 Focused International Growth, you can compare the effects of market volatilities on Mid Cap and Focused International 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 Focused International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Focused International.
Diversification Opportunities for Mid Cap and Focused International
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mid and Focused is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Value and Focused International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focused International 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 Focused International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focused International has no effect on the direction of Mid Cap i.e., Mid Cap and Focused International go up and down completely randomly.
Pair Corralation between Mid Cap and Focused International
Assuming the 90 days horizon Mid Cap Value is expected to generate 0.88 times more return on investment than Focused International. However, Mid Cap Value is 1.13 times less risky than Focused International. It trades about 0.38 of its potential returns per unit of risk. Focused International Growth is currently generating about 0.02 per unit of risk. If you would invest 1,684 in Mid Cap Value on September 1, 2024 and sell it today you would earn a total of 102.00 from holding Mid Cap Value or generate 6.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mid Cap Value vs. Focused International Growth
Performance |
| Timeline |
| Mid Cap Value |
| Focused International |
Mid Cap and Focused International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid Cap and Focused International
The main advantage of trading using opposite Mid Cap and Focused International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap position performs unexpectedly, Focused International 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 Focused International will offset losses from the drop in Focused International's long position.| Mid Cap vs. Goldman Sachs Emerging | Mid Cap vs. Aqr Long Short Equity | Mid Cap vs. Sp Midcap Index | Mid Cap vs. Vanguard Developed Markets |
| Focused International vs. Mid Cap Value | Focused International vs. Equity Growth Fund | Focused International vs. Income Growth Fund | Focused International vs. Diversified Bond Fund |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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