Correlation Between Mid Cap and International Growth
Can any of the company-specific risk be diversified away by investing in both Mid Cap and International 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 and International 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 International Growth Fund, you can compare the effects of market volatilities on Mid Cap and International 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 with a short position of International Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and International Growth.
Diversification Opportunities for Mid Cap and International Growth
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mid and International is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Value Profund and International Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Growth 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 Profund are associated (or correlated) with International Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Growth has no effect on the direction of Mid Cap i.e., Mid Cap and International Growth go up and down completely randomly.
Pair Corralation between Mid Cap and International Growth
Assuming the 90 days horizon Mid Cap Value Profund is expected to under-perform the International Growth. But the mutual fund apears to be less risky and, when comparing its historical volatility, Mid Cap Value Profund is 1.03 times less risky than International Growth. The mutual fund trades about -0.03 of its potential returns per unit of risk. The International Growth Fund is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,270 in International Growth Fund on September 12, 2024 and sell it today you would earn a total of 17.00 from holding International Growth Fund or generate 1.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Mid Cap Value Profund vs. International Growth Fund
Performance |
| Timeline |
| Mid Cap Value |
| International Growth |
Mid Cap and International Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid Cap and International Growth
The main advantage of trading using opposite Mid Cap and International Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap position performs unexpectedly, International 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 International Growth will offset losses from the drop in International Growth's long position.| Mid Cap vs. Inverse Government Long | Mid Cap vs. Schwab Government Money | Mid Cap vs. Goldman Sachs Government | Mid Cap vs. Payden Government Fund |
| International Growth vs. Payden High Income | International Growth vs. Guggenheim High Yield | International Growth vs. Siit High Yield | International Growth vs. Blackrock High Yield |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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