Correlation Between T Rowe and Conestoga Mid

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

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

Diversification Opportunities for T Rowe and Conestoga Mid

0.8

Correlation Coefficient

T Rowe  Conestoga Mid

Very poor diversification

The 3 months correlation between PRJIX and Conestoga is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding T Rowe Price and Conestoga Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conestoga Mid Cap and T Rowe 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 T Rowe Price are associated (or correlated) with Conestoga Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conestoga Mid Cap has no effect on the direction of T Rowe i.e., T Rowe and Conestoga Mid go up and down completely randomly.

Pair Corralation between T Rowe and Conestoga Mid

Assuming the 90 days horizon T Rowe Price is expected to under-perform the Conestoga Mid. In addition to that, T Rowe is 1.58 times more volatile than Conestoga Mid Cap. It trades about -0.2 of its total potential returns per unit of risk. Conestoga Mid Cap is currently generating about -0.07 per unit of volatility. If you would invest  1,022  in Conestoga Mid Cap on December 2, 2024 and sell it today you would lose (36.00) from holding Conestoga Mid Cap or give up 3.52% of portfolio value over 90 days.

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

T Rowe Price  vs.  Conestoga Mid Cap

T Rowe Price

Risk-Adjusted Performance

Very Weak

Over the last 90 days T Rowe Price 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 forward 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.

Conestoga Mid Cap

Risk-Adjusted Performance

Very Weak

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

Pair Trading with T Rowe and Conestoga Mid

The main advantage of trading using opposite T Rowe and Conestoga Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rowe position performs unexpectedly, Conestoga 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 Conestoga Mid will offset losses from the drop in Conestoga Mid's long position.

The idea behind T Rowe Price and Conestoga 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.