Correlation Between Mairs Power and Small Pany
Can any of the company-specific risk be diversified away by investing in both Mairs Power and Small Pany 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 Mairs Power and Small Pany into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mairs Power Growth and Small Pany Growth, you can compare the effects of market volatilities on Mairs Power and Small Pany 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 Mairs Power with a short position of Small Pany. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mairs Power and Small Pany.
Diversification Opportunities for Mairs Power and Small Pany
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Mairs and Small is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Mairs Power Growth and Small Pany Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Pany Growth and Mairs Power 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 Mairs Power Growth are associated (or correlated) with Small Pany. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Pany Growth has no effect on the direction of Mairs Power i.e., Mairs Power and Small Pany go up and down completely randomly.
Pair Corralation between Mairs Power and Small Pany
Assuming the 90 days horizon Mairs Power Growth is expected to under-perform the Small Pany. But the mutual fund apears to be less risky and, when comparing its historical volatility, Mairs Power Growth is 2.04 times less risky than Small Pany. The mutual fund trades about -0.23 of its potential returns per unit of risk. The Small Pany Growth is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 1,705 in Small Pany Growth on October 10, 2024 and sell it today you would lose (41.00) from holding Small Pany Growth or give up 2.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mairs Power Growth vs. Small Pany Growth
Performance |
| Timeline |
| Mairs Power Growth |
| Small Pany Growth |
Mairs Power and Small Pany Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mairs Power and Small Pany
The main advantage of trading using opposite Mairs Power and Small Pany positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mairs Power position performs unexpectedly, Small Pany 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 Small Pany will offset losses from the drop in Small Pany's long position.| Mairs Power vs. Meridian Trarian Fund | Mairs Power vs. Mairs Power Balanced | Mairs Power vs. Clipper Fund Inc | Mairs Power vs. Meridian Growth Fund |
| Small Pany vs. Mid Cap Growth | Small Pany vs. Growth Portfolio Class | Small Pany vs. Morgan Stanley Multi | Small Pany vs. Emerging Markets Portfolio |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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