Correlation Between Perkins Mid and Perkins Small

Can any of the company-specific risk be diversified away by investing in both Perkins Mid and Perkins 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 Perkins Mid and Perkins Small 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 Perkins Small Cap, you can compare the effects of market volatilities on Perkins Mid and Perkins 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 Perkins Mid with a short position of Perkins Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perkins Mid and Perkins Small.

Diversification Opportunities for Perkins Mid and Perkins Small

0.11

Correlation Coefficient

Perkins Mid  Perkins Small

Average diversification

The 3 months correlation between Perkins and Perkins is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Perkins Mid Cap and Perkins Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perkins Small Cap 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 Perkins Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perkins Small Cap has no effect on the direction of Perkins Mid i.e., Perkins Mid and Perkins Small go up and down completely randomly.

Pair Corralation between Perkins Mid and Perkins Small

Assuming the 90 days horizon Perkins Mid Cap is expected to under-perform the Perkins Small. In addition to that, Perkins Mid is 1.26 times more volatile than Perkins Small Cap. It trades about -0.17 of its total potential returns per unit of risk. Perkins Small Cap is currently generating about -0.16 per unit of volatility. If you would invest  2,462  in Perkins Small Cap on December 5, 2024 and sell it today you would lose (251.00) from holding Perkins Small Cap or give up 10.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Perkins Mid Cap  vs.  Perkins Small Cap

Perkins Mid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Perkins Mid Cap 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 basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Perkins Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Perkins Small 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.

Pair Trading with Perkins Mid and Perkins Small

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

The idea behind Perkins Mid Cap and Perkins Small Cap 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.