Correlation Between Inverse Mid-cap and Sp 500
Can any of the company-specific risk be diversified away by investing in both Inverse Mid-cap and Sp 500 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 Inverse Mid-cap and Sp 500 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inverse Mid Cap Strategy and Sp 500 2x, you can compare the effects of market volatilities on Inverse Mid-cap and Sp 500 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 Inverse Mid-cap with a short position of Sp 500. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inverse Mid-cap and Sp 500.
Diversification Opportunities for Inverse Mid-cap and Sp 500
-0.95 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Inverse and RYTNX is -0.95. Overlapping area represents the amount of risk that can be diversified away by holding Inverse Mid Cap Strategy and Sp 500 2x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sp 500 2x and Inverse Mid-cap 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 Inverse Mid Cap Strategy are associated (or correlated) with Sp 500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sp 500 2x has no effect on the direction of Inverse Mid-cap i.e., Inverse Mid-cap and Sp 500 go up and down completely randomly.
Pair Corralation between Inverse Mid-cap and Sp 500
Assuming the 90 days horizon Inverse Mid Cap Strategy is expected to under-perform the Sp 500. But the mutual fund apears to be less risky and, when comparing its historical volatility, Inverse Mid Cap Strategy is 1.4 times less risky than Sp 500. The mutual fund trades about -0.28 of its potential returns per unit of risk. The Sp 500 2x is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 33,741 in Sp 500 2x on August 28, 2024 and sell it today you would earn a total of 1,744 from holding Sp 500 2x or generate 5.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inverse Mid Cap Strategy vs. Sp 500 2x
Performance |
| Timeline |
| Inverse Mid Cap |
| Sp 500 2x |
Inverse Mid-cap and Sp 500 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inverse Mid-cap and Sp 500
The main advantage of trading using opposite Inverse Mid-cap and Sp 500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inverse Mid-cap position performs unexpectedly, Sp 500 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 Sp 500 will offset losses from the drop in Sp 500's long position.| Inverse Mid-cap vs. Eic Value Fund | Inverse Mid-cap vs. Archer Balanced Fund | Inverse Mid-cap vs. Small Cap Stock | Inverse Mid-cap vs. Balanced Fund Investor |
| Sp 500 vs. Direxion Monthly Nasdaq 100 | Sp 500 vs. Ultranasdaq 100 Profund Ultranasdaq 100 | Sp 500 vs. Dow 2x Strategy |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |