Correlation Between Mid Cap and The Henssler
Can any of the company-specific risk be diversified away by investing in both Mid Cap and The Henssler 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 The Henssler 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 The Henssler Equity, you can compare the effects of market volatilities on Mid Cap and The Henssler 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 The Henssler. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and The Henssler.
Diversification Opportunities for Mid Cap and The Henssler
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mid and The is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Growth and The Henssler Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henssler Equity 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 The Henssler. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henssler Equity has no effect on the direction of Mid Cap i.e., Mid Cap and The Henssler go up and down completely randomly.
Pair Corralation between Mid Cap and The Henssler
Assuming the 90 days horizon Mid Cap Growth is expected to generate 0.74 times more return on investment than The Henssler. However, Mid Cap Growth is 1.35 times less risky than The Henssler. It trades about 0.06 of its potential returns per unit of risk. The Henssler Equity is currently generating about -0.01 per unit of risk. If you would invest 2,961 in Mid Cap Growth on October 31, 2024 and sell it today you would earn a total of 1,040 from holding Mid Cap Growth or generate 35.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mid Cap Growth vs. The Henssler Equity
Performance |
| Timeline |
| Mid Cap Growth |
| Henssler Equity |
Mid Cap and The Henssler Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid Cap and The Henssler
The main advantage of trading using opposite Mid Cap and The Henssler positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap position performs unexpectedly, The Henssler 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 The Henssler will offset losses from the drop in The Henssler'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 |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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