Correlation Between Midcap Growth and Inflation Protected
Can any of the company-specific risk be diversified away by investing in both Midcap Growth and Inflation Protected 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 Inflation Protected 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 Inflation Protected Bond Fund, you can compare the effects of market volatilities on Midcap Growth and Inflation Protected 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 Inflation Protected. Check out your portfolio center. Please also check ongoing floating volatility patterns of Midcap Growth and Inflation Protected.
Diversification Opportunities for Midcap Growth and Inflation Protected
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Midcap and Inflation is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Midcap Growth Fund and Inflation Protected Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inflation Protected 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 Inflation Protected. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inflation Protected has no effect on the direction of Midcap Growth i.e., Midcap Growth and Inflation Protected go up and down completely randomly.
Pair Corralation between Midcap Growth and Inflation Protected
Assuming the 90 days horizon Midcap Growth Fund is expected to generate 2.75 times more return on investment than Inflation Protected. However, Midcap Growth is 2.75 times more volatile than Inflation Protected Bond Fund. It trades about 0.04 of its potential returns per unit of risk. Inflation Protected Bond Fund is currently generating about 0.07 per unit of risk. If you would invest 678.00 in Midcap Growth Fund on September 12, 2024 and sell it today you would earn a total of 150.00 from holding Midcap Growth Fund or generate 22.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.18% |
| Values | Daily Returns |
Midcap Growth Fund vs. Inflation Protected Bond Fund
Performance |
| Timeline |
| Midcap Growth |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Inflation Protected |
Midcap Growth and Inflation Protected Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Midcap Growth and Inflation Protected
The main advantage of trading using opposite Midcap Growth and Inflation Protected positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Midcap Growth position performs unexpectedly, Inflation Protected 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 Inflation Protected will offset losses from the drop in Inflation Protected's long position.| Midcap Growth vs. T Rowe Price | Midcap Growth vs. T Rowe Price | Midcap Growth vs. SCOR PK | Midcap Growth vs. Morningstar Unconstrained Allocation |
| Inflation Protected vs. Aqr Large Cap | Inflation Protected vs. Pace Large Growth | Inflation Protected vs. Old Westbury Large | Inflation Protected vs. Rational Strategic Allocation |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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