Correlation Between Firsthand Technology and Midcap Fund
Can any of the company-specific risk be diversified away by investing in both Firsthand Technology and Midcap Fund 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 Firsthand Technology and Midcap Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Firsthand Technology Opportunities and Midcap Fund Class, you can compare the effects of market volatilities on Firsthand Technology and Midcap Fund 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 Firsthand Technology with a short position of Midcap Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Firsthand Technology and Midcap Fund.
Diversification Opportunities for Firsthand Technology and Midcap Fund
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Firsthand and Midcap is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Firsthand Technology Opportuni and Midcap Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midcap Fund Class and Firsthand Technology 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 Firsthand Technology Opportunities are associated (or correlated) with Midcap Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midcap Fund Class has no effect on the direction of Firsthand Technology i.e., Firsthand Technology and Midcap Fund go up and down completely randomly.
Pair Corralation between Firsthand Technology and Midcap Fund
Assuming the 90 days horizon Firsthand Technology Opportunities is expected to under-perform the Midcap Fund. In addition to that, Firsthand Technology is 1.74 times more volatile than Midcap Fund Class. It trades about -0.07 of its total potential returns per unit of risk. Midcap Fund Class is currently generating about 0.06 per unit of volatility. If you would invest 4,315 in Midcap Fund Class on October 22, 2024 and sell it today you would earn a total of 40.00 from holding Midcap Fund Class or generate 0.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Firsthand Technology Opportuni vs. Midcap Fund Class
Performance |
| Timeline |
| Firsthand Technology |
| Midcap Fund Class |
Firsthand Technology and Midcap Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Firsthand Technology and Midcap Fund
The main advantage of trading using opposite Firsthand Technology and Midcap Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Firsthand Technology position performs unexpectedly, Midcap Fund 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 Fund will offset losses from the drop in Midcap Fund's long position.| Firsthand Technology vs. Berkshire Focus | Firsthand Technology vs. Red Oak Technology | Firsthand Technology vs. Jacob Internet Fund | Firsthand Technology vs. Kinetics Internet Fund |
| Midcap Fund vs. Pgim Jennison Technology | Midcap Fund vs. Pgim Jennison Technology | Midcap Fund vs. Firsthand Technology Opportunities | Midcap Fund vs. Vanguard Information Technology |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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