Correlation Between Gurtin California and Midcap Growth

Can any of the company-specific risk be diversified away by investing in both Gurtin California and Midcap Growth 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 Gurtin California and Midcap Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gurtin California Muni and Midcap Growth Fund, you can compare the effects of market volatilities on Gurtin California and Midcap Growth 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 Gurtin California with a short position of Midcap Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gurtin California and Midcap Growth.

Diversification Opportunities for Gurtin California and Midcap Growth

0.46

Correlation Coefficient

Gurtin California  Midcap Growth

Very weak diversification

The 3 months correlation between Gurtin and Midcap is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Gurtin California Muni and Midcap Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midcap Growth and Gurtin California 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 Gurtin California Muni are associated (or correlated) with Midcap Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midcap Growth has no effect on the direction of Gurtin California i.e., Gurtin California and Midcap Growth go up and down completely randomly.

Pair Corralation between Gurtin California and Midcap Growth

Assuming the 90 days horizon Gurtin California Muni is expected to generate 0.01 times more return on investment than Midcap Growth. However, Gurtin California Muni is 82.58 times less risky than Midcap Growth. It trades about -0.38 of its potential returns per unit of risk. Midcap Growth Fund is currently generating about -0.25 per unit of risk. If you would invest  1,010  in Gurtin California Muni on October 9, 2024 and sell it today you would lose (12.00) from holding Gurtin California Muni or give up 1.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Gurtin California Muni  vs.  Midcap Growth Fund

Gurtin California Muni

Risk-Adjusted Performance

0 of 100

Very Weak

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

Midcap Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Midcap Growth Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward-looking indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Gurtin California and Midcap Growth

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

The idea behind Gurtin California Muni and Midcap Growth 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 Channel module to use Commodity Channel Index to analyze current equity momentum.