Correlation Between Perkins Mid and Aston Montag

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

Diversification Opportunities for Perkins Mid and Aston Montag

0.81

Correlation Coefficient

Perkins Mid  Aston Montag

Very poor diversification

The 3 months correlation between Perkins and Aston is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Perkins Mid Cap and Aston Montag Caldwell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aston Montag Caldwell 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 Aston Montag. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aston Montag Caldwell has no effect on the direction of Perkins Mid i.e., Perkins Mid and Aston Montag go up and down completely randomly.

Pair Corralation between Perkins Mid and Aston Montag

Assuming the 90 days horizon Perkins Mid Cap is expected to generate 0.74 times more return on investment than Aston Montag. However, Perkins Mid Cap is 1.35 times less risky than Aston Montag. It trades about -0.04 of its potential returns per unit of risk. Aston Montag Caldwell is currently generating about -0.09 per unit of risk. If you would invest  1,553  in Perkins Mid Cap on December 29, 2024 and sell it today you would lose (33.00) from holding Perkins Mid Cap or give up 2.12% of portfolio value over 90 days.

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

Perkins Mid Cap  vs.  Aston Montag Caldwell

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 fairly strong basic indicators, Perkins Mid is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aston Montag Caldwell

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aston Montag Caldwell has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental 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 Aston Montag

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

The idea behind Perkins Mid Cap and Aston Montag Caldwell 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.