Correlation Between Crm Small/mid and Thompson Midcap

Can any of the company-specific risk be diversified away by investing in both Crm Small/mid and Thompson 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 Crm Small/mid and Thompson Midcap into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Crm Smallmid Cap and Thompson Midcap Fund, you can compare the effects of market volatilities on Crm Small/mid and Thompson 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 Crm Small/mid with a short position of Thompson Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crm Small/mid and Thompson Midcap.

Diversification Opportunities for Crm Small/mid and Thompson Midcap

0.89

Correlation Coefficient

Crm Small/mid  Thompson Midcap

Very poor diversification

The 3 months correlation between Crm and Thompson is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Crm Smallmid Cap and Thompson Midcap Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thompson Midcap and Crm Small/mid 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 Crm Smallmid Cap are associated (or correlated) with Thompson Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thompson Midcap has no effect on the direction of Crm Small/mid i.e., Crm Small/mid and Thompson Midcap go up and down completely randomly.

Pair Corralation between Crm Small/mid and Thompson Midcap

Assuming the 90 days horizon Crm Smallmid Cap is expected to under-perform the Thompson Midcap. In addition to that, Crm Small/mid is 1.07 times more volatile than Thompson Midcap Fund. It trades about -0.17 of its total potential returns per unit of risk. Thompson Midcap Fund is currently generating about -0.05 per unit of volatility. If you would invest  1,338  in Thompson Midcap Fund on December 29, 2024 and sell it today you would lose (45.00) from holding Thompson Midcap Fund or give up 3.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

Crm Smallmid Cap  vs.  Thompson Midcap Fund

Crm Smallmid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Crm Smallmid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Thompson Midcap

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Crm Small/mid and Thompson Midcap

The main advantage of trading using opposite Crm Small/mid and Thompson Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crm Small/mid position performs unexpectedly, Thompson 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 Thompson Midcap will offset losses from the drop in Thompson Midcap's long position.

The idea behind Crm Smallmid Cap and Thompson Midcap Fund 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 Commodity Directory module to find actively traded commodities issued by global exchanges.