Correlation Between The National and The Midcap
Can any of the company-specific risk be diversified away by investing in both The National and The 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 The National and The Midcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The National Tax Free and The Midcap Growth, you can compare the effects of market volatilities on The National and The 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 The National with a short position of The Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of The National and The Midcap.
Diversification Opportunities for The National and The Midcap
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between THE and The is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding The National Tax Free and The Midcap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midcap Growth and The National 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 The National Tax Free are associated (or correlated) with The Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midcap Growth has no effect on the direction of The National i.e., The National and The Midcap go up and down completely randomly.
Pair Corralation between The National and The Midcap
Assuming the 90 days horizon The National is expected to generate 4.97 times less return on investment than The Midcap. But when comparing it to its historical volatility, The National Tax Free is 5.4 times less risky than The Midcap. It trades about 0.08 of its potential returns per unit of risk. The Midcap Growth is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4,388 in The Midcap Growth on August 26, 2024 and sell it today you would earn a total of 742.00 from holding The Midcap Growth or generate 16.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The National Tax Free vs. The Midcap Growth
Performance |
| Timeline |
| National Tax |
| Midcap Growth |
The National and The Midcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The National and The Midcap
The main advantage of trading using opposite The National and The Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The National position performs unexpectedly, The 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 The Midcap will offset losses from the drop in The Midcap's long position.| The National vs. The Missouri Tax Free | The National vs. The Bond Fund | The National vs. High Yield Municipal Fund | The National vs. Fidelity Intermediate Municipal |
| The Midcap vs. The Kansas Tax Free | The Midcap vs. The Bond Fund | The Midcap vs. The Growth Fund | The Midcap vs. The Missouri Tax Free |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| CEOs Directory Screen CEOs from public companies around the world |