Correlation Between Congress Large and Congress Mid
Can any of the company-specific risk be diversified away by investing in both Congress Large and Congress Mid 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 Congress Large and Congress Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Congress Large Cap and Congress Mid Cap, you can compare the effects of market volatilities on Congress Large and Congress Mid 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 Congress Large with a short position of Congress Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Congress Large and Congress Mid.
Diversification Opportunities for Congress Large and Congress Mid
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Congress and Congress is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Congress Large Cap and Congress Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Congress Mid Cap and Congress Large 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 Congress Large Cap are associated (or correlated) with Congress Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Congress Mid Cap has no effect on the direction of Congress Large i.e., Congress Large and Congress Mid go up and down completely randomly.
Pair Corralation between Congress Large and Congress Mid
Assuming the 90 days horizon Congress Large Cap is expected to generate 0.84 times more return on investment than Congress Mid. However, Congress Large Cap is 1.18 times less risky than Congress Mid. It trades about 0.19 of its potential returns per unit of risk. Congress Mid Cap is currently generating about 0.13 per unit of risk. If you would invest 4,709 in Congress Large Cap on September 11, 2024 and sell it today you would earn a total of 452.00 from holding Congress Large Cap or generate 9.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Congress Large Cap vs. Congress Mid Cap
Performance |
| Timeline |
| Congress Large Cap |
| Congress Mid Cap |
Congress Large and Congress Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Congress Large and Congress Mid
The main advantage of trading using opposite Congress Large and Congress Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Congress Large position performs unexpectedly, Congress Mid 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 Congress Mid will offset losses from the drop in Congress Mid's long position.| Congress Large vs. Shelton Emerging Markets | Congress Large vs. Arrow Managed Futures | Congress Large vs. Rbc Emerging Markets | Congress Large vs. Touchstone Sands Capital |
| Congress Mid vs. Congress Mid Cap | Congress Mid vs. Congress Large Cap | Congress Mid vs. Congress Large Cap | Congress Mid vs. Champlain Mid Cap |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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