Correlation Between Mid Cap and Pear Tree
Can any of the company-specific risk be diversified away by investing in both Mid Cap and Pear Tree 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 Pear Tree into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mid Cap Growth and Pear Tree Essex, you can compare the effects of market volatilities on Mid Cap and Pear Tree 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 Pear Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Pear Tree.
Diversification Opportunities for Mid Cap and Pear Tree
Modest diversification
The 3 months correlation between Mid and Pear is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Growth and Pear Tree Essex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pear Tree Essex 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 Growth are associated (or correlated) with Pear Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pear Tree Essex has no effect on the direction of Mid Cap i.e., Mid Cap and Pear Tree go up and down completely randomly.
Pair Corralation between Mid Cap and Pear Tree
Assuming the 90 days horizon Mid Cap Growth is expected to generate 1.03 times more return on investment than Pear Tree. However, Mid Cap is 1.03 times more volatile than Pear Tree Essex. It trades about 0.24 of its potential returns per unit of risk. Pear Tree Essex is currently generating about 0.1 per unit of risk. If you would invest 3,469 in Mid Cap Growth on September 12, 2024 and sell it today you would earn a total of 600.00 from holding Mid Cap Growth or generate 17.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Mid Cap Growth vs. Pear Tree Essex
Performance |
| Timeline |
| Mid Cap Growth |
| Pear Tree Essex |
Mid Cap and Pear Tree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid Cap and Pear Tree
The main advantage of trading using opposite Mid Cap and Pear Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap position performs unexpectedly, Pear Tree 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 Pear Tree will offset losses from the drop in Pear Tree's long position.| Mid Cap vs. Touchstone Sustainability And | Mid Cap vs. Growth Opportunities Fund | Mid Cap vs. Total Return Fund | Mid Cap vs. William Blair International |
| Pear Tree vs. Third Avenue Real | Pear Tree vs. Third Avenue Small Cap | Pear Tree vs. Smead Value Fund | Pear Tree vs. Baron Focused Growth |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
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| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |