Correlation Between Mid Cap and Select Fund
Can any of the company-specific risk be diversified away by investing in both Mid Cap and Select 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 Select 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 Select Fund A, you can compare the effects of market volatilities on Mid Cap and Select 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 Select Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Select Fund.
Diversification Opportunities for Mid Cap and Select Fund
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mid and Select is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Value and Select Fund A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Select Fund A 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 Select Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Select Fund A has no effect on the direction of Mid Cap i.e., Mid Cap and Select Fund go up and down completely randomly.
Pair Corralation between Mid Cap and Select Fund
Assuming the 90 days horizon Mid Cap is expected to generate 1.44 times less return on investment than Select Fund. But when comparing it to its historical volatility, Mid Cap Value is 1.54 times less risky than Select Fund. It trades about 0.09 of its potential returns per unit of risk. Select Fund A is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 9,667 in Select Fund A on August 27, 2024 and sell it today you would earn a total of 2,153 from holding Select Fund A or generate 22.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mid Cap Value vs. Select Fund A
Performance |
| Timeline |
| Mid Cap Value |
| Select Fund A |
Mid Cap and Select Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid Cap and Select Fund
The main advantage of trading using opposite Mid Cap and Select Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap position performs unexpectedly, Select 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 Select Fund will offset losses from the drop in Select Fund's long position.| Mid Cap vs. Eaton Vance Atlanta | Mid Cap vs. Templeton Global Bond | Mid Cap vs. Prudential Qma Stock | Mid Cap vs. Aquagold International |
| Select Fund vs. International Growth Fund | Select Fund vs. Heritage Fund Investor | Select Fund vs. Janus Global Research |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |