Correlation Between Congress Mid and Century Small
Can any of the company-specific risk be diversified away by investing in both Congress Mid and Century Small 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 Mid and Century Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Congress Mid Cap and Century Small Cap, you can compare the effects of market volatilities on Congress Mid and Century Small 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 Mid with a short position of Century Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Congress Mid and Century Small.
Diversification Opportunities for Congress Mid and Century Small
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Congress and Century is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Congress Mid Cap and Century Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Small Cap and Congress 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 Congress Mid Cap are associated (or correlated) with Century Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Small Cap has no effect on the direction of Congress Mid i.e., Congress Mid and Century Small go up and down completely randomly.
Pair Corralation between Congress Mid and Century Small
Assuming the 90 days horizon Congress Mid is expected to generate 2.31 times less return on investment than Century Small. But when comparing it to its historical volatility, Congress Mid Cap is 1.26 times less risky than Century Small. It trades about 0.07 of its potential returns per unit of risk. Century Small Cap is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 4,106 in Century Small Cap on September 5, 2024 and sell it today you would earn a total of 904.00 from holding Century Small Cap or generate 22.02% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Congress Mid Cap vs. Century Small Cap
Performance |
Timeline |
Congress Mid Cap |
Century Small Cap |
Congress Mid and Century Small Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Congress Mid and Century Small
The main advantage of trading using opposite Congress Mid and Century Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Congress Mid position performs unexpectedly, Century Small 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 Century Small will offset losses from the drop in Century Small's long position.Congress Mid vs. Polen Growth Fund | Congress Mid vs. Aquagold International | Congress Mid vs. Morningstar Unconstrained Allocation | Congress Mid vs. Thrivent High Yield |
Century Small vs. Congress Mid Cap | Century Small vs. Congress Mid Cap | Century Small vs. Congress Large Cap | Century Small vs. Congress Large 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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