Correlation Between Midcap Fund and Gqg Partners

Can any of the company-specific risk be diversified away by investing in both Midcap Fund and Gqg Partners 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 Midcap Fund and Gqg Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Midcap Fund Institutional and Gqg Partners Emerg, you can compare the effects of market volatilities on Midcap Fund and Gqg Partners 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 Midcap Fund with a short position of Gqg Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Midcap Fund and Gqg Partners.

Diversification Opportunities for Midcap Fund and Gqg Partners

0.55

Correlation Coefficient

Midcap Fund  Gqg Partners

Very weak diversification

The 3 months correlation between Midcap and Gqg is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Midcap Fund Institutional and Gqg Partners Emerg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gqg Partners Emerg and Midcap Fund 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 Midcap Fund Institutional are associated (or correlated) with Gqg Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gqg Partners Emerg has no effect on the direction of Midcap Fund i.e., Midcap Fund and Gqg Partners go up and down completely randomly.

Pair Corralation between Midcap Fund and Gqg Partners

Assuming the 90 days horizon Midcap Fund Institutional is expected to under-perform the Gqg Partners. In addition to that, Midcap Fund is 1.3 times more volatile than Gqg Partners Emerg. It trades about -0.12 of its total potential returns per unit of risk. Gqg Partners Emerg is currently generating about -0.09 per unit of volatility. If you would invest  1,669  in Gqg Partners Emerg on December 1, 2024 and sell it today you would lose (73.00) from holding Gqg Partners Emerg or give up 4.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Midcap Fund Institutional  vs.  Gqg Partners Emerg

Midcap Fund Institutional

Risk-Adjusted Performance

Very Weak

Over the last 90 days Midcap Fund Institutional has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Gqg Partners Emerg

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Midcap Fund and Gqg Partners

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

The idea behind Midcap Fund Institutional and Gqg Partners Emerg 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.