Correlation Between Inflation Protection and Edge Midcap
Can any of the company-specific risk be diversified away by investing in both Inflation Protection 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 Inflation Protection and Edge Midcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inflation Protection Fund and Edge Midcap Fund, you can compare the effects of market volatilities on Inflation Protection 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 Inflation Protection with a short position of Edge Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inflation Protection and Edge Midcap.
Diversification Opportunities for Inflation Protection and Edge Midcap
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Inflation and Edge is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Inflation Protection 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 Inflation Protection 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 Inflation Protection 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 Inflation Protection i.e., Inflation Protection and Edge Midcap go up and down completely randomly.
Pair Corralation between Inflation Protection and Edge Midcap
Assuming the 90 days horizon Inflation Protection Fund is expected to generate 0.35 times more return on investment than Edge Midcap. However, Inflation Protection Fund is 2.83 times less risky than Edge Midcap. It trades about 0.29 of its potential returns per unit of risk. Edge Midcap Fund is currently generating about -0.09 per unit of risk. If you would invest 762.00 in Inflation Protection Fund on November 29, 2024 and sell it today you would earn a total of 12.00 from holding Inflation Protection Fund or generate 1.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inflation Protection Fund vs. Edge Midcap Fund
Performance |
| Timeline |
| Inflation Protection |
| Edge Midcap Fund |
Inflation Protection and Edge Midcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inflation Protection and Edge Midcap
The main advantage of trading using opposite Inflation Protection and Edge Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inflation Protection 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.| Inflation Protection vs. Government Securities Fund | Inflation Protection vs. Blackrock Government Bond | Inflation Protection vs. John Hancock Government | Inflation Protection vs. Us Government Securities |
| 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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