Correlation Between Mid Cap and Metropolitan West
Can any of the company-specific risk be diversified away by investing in both Mid Cap and Metropolitan West 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 Metropolitan West 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 Metropolitan West Total, you can compare the effects of market volatilities on Mid Cap and Metropolitan West 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 Metropolitan West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Metropolitan West.
Diversification Opportunities for Mid Cap and Metropolitan West
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mid and Metropolitan is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap 15x Strategy and Metropolitan West Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan West Total 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 Metropolitan West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan West Total has no effect on the direction of Mid Cap i.e., Mid Cap and Metropolitan West go up and down completely randomly.
Pair Corralation between Mid Cap and Metropolitan West
Assuming the 90 days horizon Mid Cap 15x Strategy is expected to generate 4.03 times more return on investment than Metropolitan West. However, Mid Cap is 4.03 times more volatile than Metropolitan West Total. It trades about 0.1 of its potential returns per unit of risk. Metropolitan West Total is currently generating about -0.04 per unit of risk. If you would invest 13,661 in Mid Cap 15x Strategy on September 13, 2024 and sell it today you would earn a total of 845.00 from holding Mid Cap 15x Strategy or generate 6.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mid Cap 15x Strategy vs. Metropolitan West Total
Performance |
| Timeline |
| Mid Cap 15x |
| Metropolitan West Total |
Mid Cap and Metropolitan West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid Cap and Metropolitan West
The main advantage of trading using opposite Mid Cap and Metropolitan West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap position performs unexpectedly, Metropolitan West 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 Metropolitan West will offset losses from the drop in Metropolitan West's long position.| Mid Cap vs. Basic Materials Fund | Mid Cap vs. Basic Materials Fund | Mid Cap vs. Banking Fund Class | Mid Cap vs. Basic Materials Fund |
| Metropolitan West vs. Hewitt Money Market | Metropolitan West vs. Putnam Money Market | Metropolitan West vs. Chestnut Street Exchange | Metropolitan West vs. Schwab Treasury Money |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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