Correlation Between Sp Midcap and Strengthening Dollar
Can any of the company-specific risk be diversified away by investing in both Sp Midcap and Strengthening Dollar 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 Sp Midcap and Strengthening Dollar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sp Midcap 400 and Strengthening Dollar 2x, you can compare the effects of market volatilities on Sp Midcap and Strengthening Dollar 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 Sp Midcap with a short position of Strengthening Dollar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sp Midcap and Strengthening Dollar.
Diversification Opportunities for Sp Midcap and Strengthening Dollar
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between RYAVX and Strengthening is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Sp Midcap 400 and Strengthening Dollar 2x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strengthening Dollar and Sp Midcap 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 Sp Midcap 400 are associated (or correlated) with Strengthening Dollar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strengthening Dollar has no effect on the direction of Sp Midcap i.e., Sp Midcap and Strengthening Dollar go up and down completely randomly.
Pair Corralation between Sp Midcap and Strengthening Dollar
Assuming the 90 days horizon Sp Midcap 400 is expected to generate 1.31 times more return on investment than Strengthening Dollar. However, Sp Midcap is 1.31 times more volatile than Strengthening Dollar 2x. It trades about 0.26 of its potential returns per unit of risk. Strengthening Dollar 2x is currently generating about 0.18 per unit of risk. If you would invest 7,672 in Sp Midcap 400 on August 31, 2024 and sell it today you would earn a total of 629.00 from holding Sp Midcap 400 or generate 8.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sp Midcap 400 vs. Strengthening Dollar 2x
Performance |
| Timeline |
| Sp Midcap 400 |
| Strengthening Dollar |
Sp Midcap and Strengthening Dollar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sp Midcap and Strengthening Dollar
The main advantage of trading using opposite Sp Midcap and Strengthening Dollar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sp Midcap position performs unexpectedly, Strengthening Dollar 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 Strengthening Dollar will offset losses from the drop in Strengthening Dollar's long position.| Sp Midcap vs. Sp 500 Pure | Sp Midcap vs. Sp Smallcap 600 | Sp Midcap vs. Sp Smallcap 600 | Sp Midcap vs. Sp 500 Pure |
| Strengthening Dollar vs. Rising Dollar Profund | Strengthening Dollar vs. Strengthening Dollar 2x | Strengthening Dollar vs. Strengthening Dollar 2x | Strengthening Dollar vs. Short Real Estate |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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