Correlation Between Strategic Asset and Midcap Value
Can any of the company-specific risk be diversified away by investing in both Strategic Asset and Midcap Value 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 Strategic Asset and Midcap Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strategic Asset Management and Midcap Value Fund, you can compare the effects of market volatilities on Strategic Asset and Midcap Value 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 Strategic Asset with a short position of Midcap Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Asset and Midcap Value.
Diversification Opportunities for Strategic Asset and Midcap Value
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Strategic and Midcap is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Asset Management and Midcap Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midcap Value and Strategic Asset 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 Strategic Asset Management are associated (or correlated) with Midcap Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midcap Value has no effect on the direction of Strategic Asset i.e., Strategic Asset and Midcap Value go up and down completely randomly.
Pair Corralation between Strategic Asset and Midcap Value
Assuming the 90 days horizon Strategic Asset Management is expected to generate 0.87 times more return on investment than Midcap Value. However, Strategic Asset Management is 1.15 times less risky than Midcap Value. It trades about 0.11 of its potential returns per unit of risk. Midcap Value Fund is currently generating about 0.08 per unit of risk. If you would invest 1,867 in Strategic Asset Management on September 2, 2024 and sell it today you would earn a total of 616.00 from holding Strategic Asset Management or generate 32.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Strategic Asset Management vs. Midcap Value Fund
Performance |
| Timeline |
| Strategic Asset Mana |
| Midcap Value |
Strategic Asset and Midcap Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strategic Asset and Midcap Value
The main advantage of trading using opposite Strategic Asset and Midcap Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategic Asset position performs unexpectedly, Midcap Value 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 Value will offset losses from the drop in Midcap Value's long position.| Strategic Asset vs. Adams Diversified Equity | Strategic Asset vs. Huber Capital Diversified | Strategic Asset vs. Massmutual Premier Diversified | Strategic Asset vs. Pgim Conservative Retirement |
| Midcap Value vs. Strategic Asset Management | Midcap Value vs. Strategic Asset Management | Midcap Value vs. Strategic Asset Management | Midcap Value 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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