Correlation Between Mid Cap and First Investors
Can any of the company-specific risk be diversified away by investing in both Mid Cap and First Investors 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 Mid Cap and First Investors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mid Cap 15x Strategy and First Investors Select, you can compare the effects of market volatilities on Mid Cap and First Investors 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 Mid Cap with a short position of First Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and First Investors.
Diversification Opportunities for Mid Cap and First Investors
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mid and First is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap 15x Strategy and First Investors Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Investors Select and 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 Mid Cap 15x Strategy are associated (or correlated) with First Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Investors Select has no effect on the direction of Mid Cap i.e., Mid Cap and First Investors go up and down completely randomly.
Pair Corralation between Mid Cap and First Investors
Assuming the 90 days horizon Mid Cap 15x Strategy is expected to generate 1.42 times more return on investment than First Investors. However, Mid Cap is 1.42 times more volatile than First Investors Select. It trades about 0.33 of its potential returns per unit of risk. First Investors Select is currently generating about 0.16 per unit of risk. If you would invest 13,240 in Mid Cap 15x Strategy on October 24, 2024 and sell it today you would earn a total of 987.00 from holding Mid Cap 15x Strategy or generate 7.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mid Cap 15x Strategy vs. First Investors Select
Performance |
| Timeline |
| Mid Cap 15x |
| First Investors Select |
Mid Cap and First Investors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid Cap and First Investors
The main advantage of trading using opposite Mid Cap and First Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap position performs unexpectedly, First Investors 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 First Investors will offset losses from the drop in First Investors' long position.| Mid Cap vs. Icon Financial Fund | Mid Cap vs. First Trust Specialty | Mid Cap vs. Angel Oak Financial | Mid Cap vs. Fidelity Advisor Financial |
| First Investors vs. Black Oak Emerging | First Investors vs. Catalystmillburn Hedge Strategy | First Investors vs. Barings Emerging Markets | First Investors vs. Mid Cap 15x 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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