Correlation Between Perkins Mid and Total Return

Can any of the company-specific risk be diversified away by investing in both Perkins Mid and Total Return 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 Perkins Mid and Total Return into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Perkins Mid Cap and Total Return Fund, you can compare the effects of market volatilities on Perkins Mid and Total Return 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 Perkins Mid with a short position of Total Return. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perkins Mid and Total Return.

Diversification Opportunities for Perkins Mid and Total Return

-0.58

Correlation Coefficient

Perkins Mid  Total Return

Excellent diversification

The 3 months correlation between Perkins and Total is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Perkins Mid Cap and Total Return Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Total Return and Perkins 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 Perkins Mid Cap are associated (or correlated) with Total Return. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Return has no effect on the direction of Perkins Mid i.e., Perkins Mid and Total Return go up and down completely randomly.

Pair Corralation between Perkins Mid and Total Return

Assuming the 90 days horizon Perkins Mid Cap is expected to generate 2.53 times more return on investment than Total Return. However, Perkins Mid is 2.53 times more volatile than Total Return Fund. It trades about 0.18 of its potential returns per unit of risk. Total Return Fund is currently generating about -0.06 per unit of risk. If you would invest  1,654  in Perkins Mid Cap on September 6, 2024 and sell it today you would earn a total of  148.00  from holding Perkins Mid Cap or generate 8.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Perkins Mid Cap  vs.  Total Return Fund

Perkins Mid Cap

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Perkins Mid Cap are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Perkins Mid may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Total Return

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Perkins Mid and Total Return

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

The idea behind Perkins Mid Cap and Total Return 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 Global Correlations module to find global opportunities by holding instruments from different markets.