Correlation Between Smallcap Growth and Edge Midcap
Can any of the company-specific risk be diversified away by investing in both Smallcap 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 Smallcap 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 Smallcap Growth Fund and Edge Midcap Fund, you can compare the effects of market volatilities on Smallcap 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 Smallcap Growth with a short position of Edge Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Growth and Edge Midcap.
Diversification Opportunities for Smallcap Growth and Edge Midcap
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Smallcap and Edge is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap 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 Smallcap 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 Smallcap 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 Smallcap Growth i.e., Smallcap Growth and Edge Midcap go up and down completely randomly.
Pair Corralation between Smallcap Growth and Edge Midcap
Assuming the 90 days horizon Smallcap Growth Fund is expected to under-perform the Edge Midcap. In addition to that, Smallcap Growth is 1.43 times more volatile than Edge Midcap Fund. It trades about -0.27 of its total potential returns per unit of risk. Edge Midcap Fund is currently generating about -0.09 per unit of volatility. If you would invest 1,329 in Edge Midcap Fund on November 29, 2024 and sell it today you would lose (19.00) from holding Edge Midcap Fund or give up 1.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smallcap Growth Fund vs. Edge Midcap Fund
Performance |
| Timeline |
| Smallcap Growth |
| Edge Midcap Fund |
Smallcap Growth and Edge Midcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap Growth and Edge Midcap
The main advantage of trading using opposite Smallcap Growth and Edge Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap 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.| Smallcap Growth vs. Siit Emerging Markets | Smallcap Growth vs. Ashmore Emerging Markets | Smallcap Growth vs. Rbc Emerging Markets | Smallcap Growth vs. Investec Emerging Markets |
| Edge Midcap vs. Barings Active Short | Edge Midcap vs. Shelton Emerging Markets | Edge Midcap vs. Credit Suisse Multialternative | Edge Midcap vs. Victory Incore 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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