Correlation Between Walden Asset and Walden Midcap
Can any of the company-specific risk be diversified away by investing in both Walden Asset and Walden 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 Walden Asset and Walden Midcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walden Asset Management and Walden Midcap Fund, you can compare the effects of market volatilities on Walden Asset and Walden 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 Walden Asset with a short position of Walden Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walden Asset and Walden Midcap.
Diversification Opportunities for Walden Asset and Walden Midcap
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Walden and Walden is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Walden Asset Management and Walden Midcap Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walden Midcap and Walden Asset 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 Walden Asset Management are associated (or correlated) with Walden Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walden Midcap has no effect on the direction of Walden Asset i.e., Walden Asset and Walden Midcap go up and down completely randomly.
Pair Corralation between Walden Asset and Walden Midcap
Assuming the 90 days horizon Walden Asset is expected to generate 2.56 times less return on investment than Walden Midcap. But when comparing it to its historical volatility, Walden Asset Management is 1.37 times less risky than Walden Midcap. It trades about 0.02 of its potential returns per unit of risk. Walden Midcap Fund is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,947 in Walden Midcap Fund on December 12, 2024 and sell it today you would earn a total of 298.00 from holding Walden Midcap Fund or generate 15.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Walden Asset Management vs. Walden Midcap Fund
Performance |
| Timeline |
| Walden Asset Management |
| Walden Midcap |
Walden Asset and Walden Midcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walden Asset and Walden Midcap
The main advantage of trading using opposite Walden Asset and Walden Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walden Asset position performs unexpectedly, Walden 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 Walden Midcap will offset losses from the drop in Walden Midcap's long position.| Walden Asset vs. Walden Equity Fund | ||
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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