Correlation Between Mid-cap Value and Mid-cap Growth
Can any of the company-specific risk be diversified away by investing in both Mid-cap Value and Mid-cap Growth 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 Value and Mid-cap Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mid Cap Value Profund and Mid Cap Growth Profund, you can compare the effects of market volatilities on Mid-cap Value and Mid-cap Growth 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 Value with a short position of Mid-cap Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid-cap Value and Mid-cap Growth.
Diversification Opportunities for Mid-cap Value and Mid-cap Growth
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mid-cap and Mid-cap is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Value Profund and Mid Cap Growth Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Cap Growth and Mid-cap Value 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 Profund are associated (or correlated) with Mid-cap Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Cap Growth has no effect on the direction of Mid-cap Value i.e., Mid-cap Value and Mid-cap Growth go up and down completely randomly.
Pair Corralation between Mid-cap Value and Mid-cap Growth
Assuming the 90 days horizon Mid-cap Value is expected to generate 1.08 times less return on investment than Mid-cap Growth. But when comparing it to its historical volatility, Mid Cap Value Profund is 1.01 times less risky than Mid-cap Growth. It trades about 0.1 of its potential returns per unit of risk. Mid Cap Growth Profund is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 6,546 in Mid Cap Growth Profund on September 2, 2024 and sell it today you would earn a total of 1,869 from holding Mid Cap Growth Profund or generate 28.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mid Cap Value Profund vs. Mid Cap Growth Profund
Performance |
| Timeline |
| Mid Cap Value |
| Mid Cap Growth |
Mid-cap Value and Mid-cap Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid-cap Value and Mid-cap Growth
The main advantage of trading using opposite Mid-cap Value and Mid-cap Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid-cap Value position performs unexpectedly, Mid-cap Growth 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 Mid-cap Growth will offset losses from the drop in Mid-cap Growth's long position.| Mid-cap Value vs. Fidelity Real Estate | Mid-cap Value vs. Msif Real Estate | Mid-cap Value vs. Jhancock Real Estate | Mid-cap Value vs. Dunham Real Estate |
| Mid-cap Growth vs. Calvert Conservative Allocation | Mid-cap Growth vs. Fidelity Advisor Diversified | Mid-cap Growth vs. Jhancock Diversified Macro | Mid-cap Growth vs. Lord Abbett Diversified |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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