Correlation Between Metropolitan West and Mid Cap
Can any of the company-specific risk be diversified away by investing in both Metropolitan West and Mid Cap 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 Metropolitan West and Mid Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metropolitan West High and Mid Cap Index, you can compare the effects of market volatilities on Metropolitan West and Mid Cap 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 Metropolitan West with a short position of Mid Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan West and Mid Cap.
Diversification Opportunities for Metropolitan West and Mid Cap
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Metropolitan and Mid is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan West High and Mid Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Cap Index and Metropolitan West 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 Metropolitan West High are associated (or correlated) with Mid Cap. 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 Index has no effect on the direction of Metropolitan West i.e., Metropolitan West and Mid Cap go up and down completely randomly.
Pair Corralation between Metropolitan West and Mid Cap
Assuming the 90 days horizon Metropolitan West is expected to generate 3.05 times less return on investment than Mid Cap. But when comparing it to its historical volatility, Metropolitan West High is 6.41 times less risky than Mid Cap. It trades about 0.22 of its potential returns per unit of risk. Mid Cap Index is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,626 in Mid Cap Index on September 1, 2024 and sell it today you would earn a total of 377.00 from holding Mid Cap Index or generate 14.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Metropolitan West High vs. Mid Cap Index
Performance |
| Timeline |
| Metropolitan West High |
| Mid Cap Index |
Metropolitan West and Mid Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metropolitan West and Mid Cap
The main advantage of trading using opposite Metropolitan West and Mid Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan West position performs unexpectedly, Mid Cap 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 will offset losses from the drop in Mid Cap's long position.| Metropolitan West vs. Federated Total Return | Metropolitan West vs. Global Bond Fund | Metropolitan West vs. Government Bond Fund | Metropolitan West vs. Aberdeen Global High |
| Mid Cap vs. Mid Cap Strategic | Mid Cap vs. Valic Company I | Mid Cap vs. Valic Company I | Mid Cap vs. Stock Index Fund |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |