Correlation Between Midcap Growth and Edge Midcap
Can any of the company-specific risk be diversified away by investing in both Midcap Growth and Edge Midcap 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 Midcap Growth and Edge Midcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Midcap Growth Fund and Edge Midcap Fund, you can compare the effects of market volatilities on Midcap Growth and Edge Midcap 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 Midcap Growth with a short position of Edge Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Midcap Growth and Edge Midcap.
Diversification Opportunities for Midcap Growth and Edge Midcap
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Midcap and Edge is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Midcap Growth Fund and Edge Midcap Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edge Midcap Fund and Midcap Growth 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 Midcap Growth Fund are associated (or correlated) with Edge Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edge Midcap Fund has no effect on the direction of Midcap Growth i.e., Midcap Growth and Edge Midcap go up and down completely randomly.
Pair Corralation between Midcap Growth and Edge Midcap
Assuming the 90 days horizon Midcap Growth Fund is expected to generate 1.24 times more return on investment than Edge Midcap. However, Midcap Growth is 1.24 times more volatile than Edge Midcap Fund. It trades about 0.39 of its potential returns per unit of risk. Edge Midcap Fund is currently generating about 0.17 per unit of risk. If you would invest 862.00 in Midcap Growth Fund on September 3, 2024 and sell it today you would earn a total of 227.00 from holding Midcap Growth Fund or generate 26.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Midcap Growth Fund vs. Edge Midcap Fund
Performance |
| Timeline |
| Midcap Growth |
| Edge Midcap Fund |
Midcap Growth and Edge Midcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Midcap Growth and Edge Midcap
The main advantage of trading using opposite Midcap Growth and Edge Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Midcap Growth position performs unexpectedly, Edge Midcap 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 Edge Midcap will offset losses from the drop in Edge Midcap's long position.| Midcap Growth vs. Global Gold Fund | Midcap Growth vs. Franklin Gold Precious | Midcap Growth vs. First Eagle Gold | Midcap Growth vs. Gamco Global Gold |
| Edge Midcap vs. Massmutual Premier Diversified | Edge Midcap vs. Western Asset Diversified | Edge Midcap vs. Aqr Diversified Arbitrage | Edge Midcap vs. Blackrock Conservative Prprdptfinstttnl |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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