Correlation Between Mid Cap and Edgar Lomax

Can any of the company-specific risk be diversified away by investing in both Mid Cap and Edgar Lomax 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 Mid Cap and Edgar Lomax into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mid Cap Value and Edgar Lomax Value, you can compare the effects of market volatilities on Mid Cap and Edgar Lomax 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 Mid Cap with a short position of Edgar Lomax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Edgar Lomax.

Diversification Opportunities for Mid Cap and Edgar Lomax

0.71

Correlation Coefficient

Mid Cap  Edgar Lomax

Poor diversification

The 3 months correlation between Mid and Edgar is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Value and Edgar Lomax Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgar Lomax Value and Mid Cap 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 Mid Cap Value are associated (or correlated) with Edgar Lomax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgar Lomax Value has no effect on the direction of Mid Cap i.e., Mid Cap and Edgar Lomax go up and down completely randomly.

Pair Corralation between Mid Cap and Edgar Lomax

Assuming the 90 days horizon Mid Cap is expected to generate 2.53 times less return on investment than Edgar Lomax. In addition to that, Mid Cap is 1.03 times more volatile than Edgar Lomax Value. It trades about 0.05 of its total potential returns per unit of risk. Edgar Lomax Value is currently generating about 0.14 per unit of volatility. If you would invest  1,446  in Edgar Lomax Value on December 28, 2024 and sell it today you would earn a total of  88.00  from holding Edgar Lomax Value or generate 6.09% return on investment over 90 days.

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

Mid Cap Value  vs.  Edgar Lomax Value

Mid Cap Value

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mid Cap Value are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Mid Cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Edgar Lomax Value

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Edgar Lomax Value are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Edgar Lomax may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Mid Cap and Edgar Lomax

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

The idea behind Mid Cap Value and Edgar Lomax Value 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.