Correlation Between Keeley Mid and Keeley Small-mid

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

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

Diversification Opportunities for Keeley Mid and Keeley Small-mid

0.96

Correlation Coefficient

Keeley Mid  Keeley Small-mid

Almost no diversification

The 3 months correlation between Keeley and Keeley is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Keeley Mid Cap and Keeley Small Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keeley Small Mid and Keeley 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 Keeley Mid Cap are associated (or correlated) with Keeley Small-mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keeley Small Mid has no effect on the direction of Keeley Mid i.e., Keeley Mid and Keeley Small-mid go up and down completely randomly.

Pair Corralation between Keeley Mid and Keeley Small-mid

Assuming the 90 days horizon Keeley Mid Cap is expected to generate 0.7 times more return on investment than Keeley Small-mid. However, Keeley Mid Cap is 1.43 times less risky than Keeley Small-mid. It trades about -0.11 of its potential returns per unit of risk. Keeley Small Mid Cap is currently generating about -0.14 per unit of risk. If you would invest  3,148  in Keeley Mid Cap on December 22, 2024 and sell it today you would lose (277.00) from holding Keeley Mid Cap or give up 8.8% of portfolio value over 90 days.

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

Keeley Mid Cap  vs.  Keeley Small Mid Cap

Keeley Mid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Keeley Mid 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.

Keeley Small Mid

Risk-Adjusted Performance

Very Weak

Over the last 90 days Keeley Small 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.

Pair Trading with Keeley Mid and Keeley Small-mid

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

The idea behind Keeley Mid Cap and Keeley Small Mid 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.