Correlation Between Walden Equity and Walden Midcap
Can any of the company-specific risk be diversified away by investing in both Walden Equity 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 Equity 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 Equity Fund and Walden Midcap Fund, you can compare the effects of market volatilities on Walden Equity 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 Equity with a short position of Walden Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walden Equity and Walden Midcap.
Diversification Opportunities for Walden Equity and Walden Midcap
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Walden and WALDEN is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Walden Equity Fund 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 Equity 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 Equity Fund 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 Equity i.e., Walden Equity and Walden Midcap go up and down completely randomly.
Pair Corralation between Walden Equity and Walden Midcap
Assuming the 90 days horizon Walden Equity is expected to generate 1.54 times less return on investment than Walden Midcap. But when comparing it to its historical volatility, Walden Equity Fund is 1.12 times less risky than Walden Midcap. It trades about 0.1 of its potential returns per unit of risk. Walden Midcap Fund is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,200 in Walden Midcap Fund on August 31, 2024 and sell it today you would earn a total of 323.00 from holding Walden Midcap Fund or generate 14.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Walden Equity Fund vs. Walden Midcap Fund
Performance |
| Timeline |
| Walden Equity |
| Walden Midcap |
Walden Equity and Walden Midcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walden Equity and Walden Midcap
The main advantage of trading using opposite Walden Equity and Walden Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walden Equity 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 Equity vs. Walden Asset Management | Walden Equity vs. Calvert Large Cap | Walden Equity vs. Calvert Equity Portfolio | Walden Equity vs. Appleseed Fund Appleseed |
| Walden Midcap vs. Boston Trust Midcap | Walden Midcap vs. Walden Equity Fund | Walden Midcap vs. Mid Cap Value | Walden Midcap vs. Blackrock Total Stock |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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