Correlation Between Thompson Largecap and Thompson Midcap
Can any of the company-specific risk be diversified away by investing in both Thompson Largecap and Thompson Midcap 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 Thompson Largecap and Thompson Midcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thompson Largecap Fund and Thompson Midcap Fund, you can compare the effects of market volatilities on Thompson Largecap and Thompson Midcap 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 Thompson Largecap with a short position of Thompson Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thompson Largecap and Thompson Midcap.
Diversification Opportunities for Thompson Largecap and Thompson Midcap
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Thompson and Thompson is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Thompson Largecap Fund and Thompson Midcap Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thompson Midcap and Thompson Largecap 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 Thompson Largecap Fund are associated (or correlated) with Thompson Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thompson Midcap has no effect on the direction of Thompson Largecap i.e., Thompson Largecap and Thompson Midcap go up and down completely randomly.
Pair Corralation between Thompson Largecap and Thompson Midcap
Assuming the 90 days horizon Thompson Largecap Fund is expected to generate 0.72 times more return on investment than Thompson Midcap. However, Thompson Largecap Fund is 1.39 times less risky than Thompson Midcap. It trades about 0.06 of its potential returns per unit of risk. Thompson Midcap Fund is currently generating about 0.04 per unit of risk. If you would invest 8,524 in Thompson Largecap Fund on August 27, 2024 and sell it today you would earn a total of 2,953 from holding Thompson Largecap Fund or generate 34.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thompson Largecap Fund vs. Thompson Midcap Fund
Performance |
| Timeline |
| Thompson Largecap |
| Thompson Midcap |
Thompson Largecap and Thompson Midcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thompson Largecap and Thompson Midcap
The main advantage of trading using opposite Thompson Largecap and Thompson Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thompson Largecap position performs unexpectedly, Thompson Midcap 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 Thompson Midcap will offset losses from the drop in Thompson Midcap's long position.| Thompson Largecap vs. Clipper Fund Inc | Thompson Largecap vs. Meridian Trarian Fund | Thompson Largecap vs. Meridian Growth Fund | Thompson Largecap vs. Muhlenkamp Fund Institutional |
| Thompson Midcap vs. Thompson Largecap Fund | Thompson Midcap vs. Thompson Bond Fund | Thompson Midcap vs. Crm Smallmid Cap | Thompson Midcap vs. Perkins Select Value |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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