Correlation Between Mid Cap and Total Return
Can any of the company-specific risk be diversified away by investing in both Mid Cap and Total Return 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 Total Return 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 Total Return Fund, you can compare the effects of market volatilities on Mid Cap and Total Return 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 Total Return. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Total Return.
Diversification Opportunities for Mid Cap and Total Return
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mid and Total is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Growth and Total Return Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Total Return 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 Total Return. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Return has no effect on the direction of Mid Cap i.e., Mid Cap and Total Return go up and down completely randomly.
Pair Corralation between Mid Cap and Total Return
Assuming the 90 days horizon Mid Cap Growth is expected to generate 2.59 times more return on investment than Total Return. However, Mid Cap is 2.59 times more volatile than Total Return Fund. It trades about 0.07 of its potential returns per unit of risk. Total Return Fund is currently generating about 0.04 per unit of risk. If you would invest 2,878 in Mid Cap Growth on August 26, 2024 and sell it today you would earn a total of 1,188 from holding Mid Cap Growth or generate 41.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mid Cap Growth vs. Total Return Fund
Performance |
| Timeline |
| Mid Cap Growth |
| Total Return |
Mid Cap and Total Return Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid Cap and Total Return
The main advantage of trading using opposite Mid Cap and Total Return positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap position performs unexpectedly, Total Return 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 Total Return will offset losses from the drop in Total Return'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 |
| Total Return vs. Total Return Fund | Total Return vs. High Yield Fund | Total Return vs. Mid Cap Growth | Total Return vs. Pimco Foreign Bond |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |