Correlation Between Focused International and Mid-cap 15x

Can any of the company-specific risk be diversified away by investing in both Focused International and Mid-cap 15x 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 Focused International and Mid-cap 15x into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Focused International Growth and Mid Cap 15x Strategy, you can compare the effects of market volatilities on Focused International and Mid-cap 15x 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 Focused International with a short position of Mid-cap 15x. Check out your portfolio center. Please also check ongoing floating volatility patterns of Focused International and Mid-cap 15x.

Diversification Opportunities for Focused International and Mid-cap 15x

0.31

Correlation Coefficient

Focused International  Mid-cap 15x

Weak diversification

The 3 months correlation between Focused and Mid-cap is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Focused International Growth and Mid Cap 15x Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Cap 15x and Focused International 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 Focused International Growth are associated (or correlated) with Mid-cap 15x. 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 15x has no effect on the direction of Focused International i.e., Focused International and Mid-cap 15x go up and down completely randomly.

Pair Corralation between Focused International and Mid-cap 15x

Assuming the 90 days horizon Focused International is expected to generate 2.84 times less return on investment than Mid-cap 15x. But when comparing it to its historical volatility, Focused International Growth is 1.47 times less risky than Mid-cap 15x. It trades about 0.13 of its potential returns per unit of risk. Mid Cap 15x Strategy is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  13,449  in Mid Cap 15x Strategy on October 25, 2024 and sell it today you would earn a total of  749.00  from holding Mid Cap 15x Strategy or generate 5.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Focused International Growth  vs.  Mid Cap 15x Strategy

Focused International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Focused International Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Focused International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mid Cap 15x

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mid Cap 15x Strategy are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Mid-cap 15x may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Focused International and Mid-cap 15x

The main advantage of trading using opposite Focused International and Mid-cap 15x positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Focused International position performs unexpectedly, Mid-cap 15x 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 15x will offset losses from the drop in Mid-cap 15x's long position.

The idea behind Focused International Growth and Mid Cap 15x Strategy 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.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.