Correlation Between NYSE Composite and Midcap Growth
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Midcap 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 NYSE Composite and Midcap Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Midcap Growth Fund, you can compare the effects of market volatilities on NYSE Composite and Midcap 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 NYSE Composite with a short position of Midcap Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Midcap Growth.
Diversification Opportunities for NYSE Composite and Midcap Growth
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and Midcap is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Midcap Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midcap Growth and NYSE Composite 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 NYSE Composite are associated (or correlated) with Midcap Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midcap Growth has no effect on the direction of NYSE Composite i.e., NYSE Composite and Midcap Growth go up and down completely randomly.
Pair Corralation between NYSE Composite and Midcap Growth
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.11 times less return on investment than Midcap Growth. But when comparing it to its historical volatility, NYSE Composite is 1.66 times less risky than Midcap Growth. It trades about 0.11 of its potential returns per unit of risk. Midcap Growth Fund is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 815.00 in Midcap Growth Fund on August 31, 2024 and sell it today you would earn a total of 268.00 from holding Midcap Growth Fund or generate 32.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
NYSE Composite vs. Midcap Growth Fund
Performance |
| Timeline |
NYSE Composite and Midcap Growth Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Midcap Growth Fund
Pair trading matchups for Midcap Growth
Pair Trading with NYSE Composite and Midcap Growth
The main advantage of trading using opposite NYSE Composite and Midcap Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Midcap 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 Midcap Growth will offset losses from the drop in Midcap Growth's long position.| NYSE Composite vs. Nextplat Corp | NYSE Composite vs. Qualys Inc | NYSE Composite vs. Cadence Design Systems | NYSE Composite vs. Asure Software |
| Midcap Growth vs. Small Cap Stock | Midcap Growth vs. Growth Opportunities Fund | Midcap Growth vs. T Rowe Price | Midcap Growth vs. Ab Value 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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