Correlation Between Davenport Small and Midas Special

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Can any of the company-specific risk be diversified away by investing in both Davenport Small and Midas Special 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 Davenport Small and Midas Special into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Davenport Small Cap and Midas Special Fund, you can compare the effects of market volatilities on Davenport Small and Midas Special 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 Davenport Small with a short position of Midas Special. Check out your portfolio center. Please also check ongoing floating volatility patterns of Davenport Small and Midas Special.

Diversification Opportunities for Davenport Small and Midas Special

DavenportMidasDiversified AwayDavenportMidasDiversified Away100%
0.65
  Correlation Coefficient

Poor diversification

The 3 months correlation between Davenport and Midas is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Davenport Small Cap and Midas Special Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midas Special and Davenport Small 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 Davenport Small Cap are associated (or correlated) with Midas Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midas Special has no effect on the direction of Davenport Small i.e., Davenport Small and Midas Special go up and down completely randomly.

Pair Corralation between Davenport Small and Midas Special

Assuming the 90 days horizon Davenport Small is expected to generate 2.61 times less return on investment than Midas Special. In addition to that, Davenport Small is 1.08 times more volatile than Midas Special Fund. It trades about 0.03 of its total potential returns per unit of risk. Midas Special Fund is currently generating about 0.09 per unit of volatility. If you would invest  3,312  in Midas Special Fund on October 9, 2024 and sell it today you would earn a total of  176.00  from holding Midas Special Fund or generate 5.31% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Davenport Small Cap  vs.  Midas Special Fund

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -20246810
JavaScript chart by amCharts 3.21.15DSCPX MISEX
       Timeline  
Davenport Small Cap 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Davenport Small Cap are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Davenport Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan17.51818.519
Midas Special 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Midas Special Fund are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Midas Special is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan3333.53434.53535.53636.5

Davenport Small and Midas Special Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.59-2.69-1.79-0.890.010.891.792.73.6 0.050.100.150.200.250.300.35
JavaScript chart by amCharts 3.21.15DSCPX MISEX
       Returns  

Pair Trading with Davenport Small and Midas Special

The main advantage of trading using opposite Davenport Small and Midas Special positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Davenport Small position performs unexpectedly, Midas Special 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 Midas Special will offset losses from the drop in Midas Special's long position.
The idea behind Davenport Small Cap and Midas Special 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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