Correlation Between Core Fixed and Mid Cap
Can any of the company-specific risk be diversified away by investing in both Core Fixed and Mid Cap 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 Core Fixed and Mid Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Core Fixed Income and Mid Cap Growth, you can compare the effects of market volatilities on Core Fixed and Mid Cap 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 Core Fixed with a short position of Mid Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Core Fixed and Mid Cap.
Diversification Opportunities for Core Fixed and Mid Cap
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Core and Mid is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Core Fixed Income and Mid Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Cap Growth and Core Fixed 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 Core Fixed Income are associated (or correlated) with Mid Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Cap Growth has no effect on the direction of Core Fixed i.e., Core Fixed and Mid Cap go up and down completely randomly.
Pair Corralation between Core Fixed and Mid Cap
Assuming the 90 days horizon Core Fixed is expected to generate 12.67 times less return on investment than Mid Cap. But when comparing it to its historical volatility, Core Fixed Income is 4.66 times less risky than Mid Cap. It trades about 0.03 of its potential returns per unit of risk. Mid Cap Growth is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,136 in Mid Cap Growth on August 24, 2024 and sell it today you would earn a total of 1,090 from holding Mid Cap Growth or generate 95.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Core Fixed Income vs. Mid Cap Growth
Performance |
| Timeline |
| Core Fixed Income |
| Mid Cap Growth |
Core Fixed and Mid Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Core Fixed and Mid Cap
The main advantage of trading using opposite Core Fixed and Mid Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Core Fixed position performs unexpectedly, Mid Cap 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 Mid Cap will offset losses from the drop in Mid Cap's long position.| Core Fixed vs. Qs Growth Fund | Core Fixed vs. Semiconductor Ultrasector Profund | Core Fixed vs. Volumetric Fund Volumetric | Core Fixed vs. Omni Small Cap 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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