Correlation Between Pear Tree and Midcap Fund
Can any of the company-specific risk be diversified away by investing in both Pear Tree and Midcap Fund 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 Pear Tree and Midcap Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pear Tree Polaris and Midcap Fund Institutional, you can compare the effects of market volatilities on Pear Tree and Midcap Fund 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 Pear Tree with a short position of Midcap Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pear Tree and Midcap Fund.
Diversification Opportunities for Pear Tree and Midcap Fund
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pear and Midcap is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Pear Tree Polaris and Midcap Fund Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midcap Fund Institutional and Pear Tree 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 Pear Tree Polaris are associated (or correlated) with Midcap Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midcap Fund Institutional has no effect on the direction of Pear Tree i.e., Pear Tree and Midcap Fund go up and down completely randomly.
Pair Corralation between Pear Tree and Midcap Fund
Assuming the 90 days horizon Pear Tree Polaris is expected to under-perform the Midcap Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, Pear Tree Polaris is 1.3 times less risky than Midcap Fund. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Midcap Fund Institutional is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 4,551 in Midcap Fund Institutional on September 2, 2024 and sell it today you would earn a total of 406.00 from holding Midcap Fund Institutional or generate 8.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pear Tree Polaris vs. Midcap Fund Institutional
Performance |
| Timeline |
| Pear Tree Polaris |
| Midcap Fund Institutional |
Pear Tree and Midcap Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pear Tree and Midcap Fund
The main advantage of trading using opposite Pear Tree and Midcap Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pear Tree position performs unexpectedly, Midcap Fund 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 Fund will offset losses from the drop in Midcap Fund's long position.| Pear Tree vs. Loomis Sayles Growth | Pear Tree vs. Edgewood Growth Fund | Pear Tree vs. Nuance Mid Cap | Pear Tree vs. Parnassus Mid Cap |
| Midcap Fund vs. Strategic Asset Management | Midcap Fund vs. Strategic Asset Management | Midcap Fund vs. Strategic Asset Management | Midcap Fund vs. Strategic Asset Management |
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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