Correlation Between Us Government and Mid Cap

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Us Government 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 Us Government and Mid Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Us Government Securities and Mid Cap Growth, you can compare the effects of market volatilities on Us Government 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 Us Government with a short position of Mid Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Government and Mid Cap.

Diversification Opportunities for Us Government and Mid Cap

-0.63
  Correlation Coefficient

Excellent diversification

The 3 months correlation between USGFX and Mid is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Us Government Securities 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 Us Government 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 Us Government Securities 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 Us Government i.e., Us Government and Mid Cap go up and down completely randomly.

Pair Corralation between Us Government and Mid Cap

Assuming the 90 days horizon Us Government is expected to generate 18.82 times less return on investment than Mid Cap. But when comparing it to its historical volatility, Us Government Securities is 4.53 times less risky than Mid Cap. It trades about 0.02 of its potential returns per unit of risk. Mid Cap Growth is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  530.00  in Mid Cap Growth on September 12, 2024 and sell it today you would earn a total of  667.00  from holding Mid Cap Growth or generate 125.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy99.8%
ValuesDaily Returns

Us Government Securities  vs.  Mid Cap Growth

 Performance 
       Timeline  
Us Government Securities 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Us Government Securities has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Us Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Mid Cap Growth 

Risk-Adjusted Performance

27 of 100

 
Weak
 
Strong
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Mid Cap Growth are ranked lower than 27 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Mid Cap showed solid returns over the last few months and may actually be approaching a breakup point.

Us Government and Mid Cap Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Us Government and Mid Cap

The main advantage of trading using opposite Us Government and Mid Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Government 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.
The idea behind Us Government Securities and Mid Cap Growth pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.

Other Complementary Tools

Content Syndication
Quickly integrate customizable finance content to your own investment portal
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
CEOs Directory
Screen CEOs from public companies around the world
Money Managers
Screen money managers from public funds and ETFs managed around the world
Sync Your Broker
Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors.