Correlation Between Locorr Hedged and Midcap Value
Can any of the company-specific risk be diversified away by investing in both Locorr Hedged and Midcap Value 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 Locorr Hedged and Midcap Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Locorr Hedged Core and Midcap Value Fund, you can compare the effects of market volatilities on Locorr Hedged and Midcap Value 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 Locorr Hedged with a short position of Midcap Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Locorr Hedged and Midcap Value.
Diversification Opportunities for Locorr Hedged and Midcap Value
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Locorr and Midcap is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Locorr Hedged Core and Midcap Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midcap Value and Locorr Hedged 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 Locorr Hedged Core are associated (or correlated) with Midcap Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midcap Value has no effect on the direction of Locorr Hedged i.e., Locorr Hedged and Midcap Value go up and down completely randomly.
Pair Corralation between Locorr Hedged and Midcap Value
Assuming the 90 days horizon Locorr Hedged is expected to generate 14.18 times less return on investment than Midcap Value. But when comparing it to its historical volatility, Locorr Hedged Core is 4.49 times less risky than Midcap Value. It trades about 0.11 of its potential returns per unit of risk. Midcap Value Fund is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 1,831 in Midcap Value Fund on September 1, 2024 and sell it today you would earn a total of 117.00 from holding Midcap Value Fund or generate 6.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Locorr Hedged Core vs. Midcap Value Fund
Performance |
| Timeline |
| Locorr Hedged Core |
| Midcap Value |
Locorr Hedged and Midcap Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Locorr Hedged and Midcap Value
The main advantage of trading using opposite Locorr Hedged and Midcap Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Locorr Hedged position performs unexpectedly, Midcap Value 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 Midcap Value will offset losses from the drop in Midcap Value's long position.| Locorr Hedged vs. Vanguard 500 Index | Locorr Hedged vs. Ridgeworth Innovative Growth | Locorr Hedged vs. Gabelli Equity Trust | Locorr Hedged vs. Loomis Sayles International |
| Midcap Value vs. Strategic Asset Management | Midcap Value vs. Strategic Asset Management | Midcap Value vs. Strategic Asset Management | Midcap Value vs. Strategic Asset Management |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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