Correlation Between Real Return and Perkins Mid

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

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

Diversification Opportunities for Real Return and Perkins Mid

-0.49

Correlation Coefficient

Real Return  Perkins Mid

Very good diversification

The 3 months correlation between REAL and Perkins is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Real Return Fund and Perkins Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perkins Mid Cap and Real Return 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 Real Return Fund are associated (or correlated) with Perkins Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perkins Mid Cap has no effect on the direction of Real Return i.e., Real Return and Perkins Mid go up and down completely randomly.

Pair Corralation between Real Return and Perkins Mid

Assuming the 90 days horizon Real Return Fund is expected to under-perform the Perkins Mid. But the mutual fund apears to be less risky and, when comparing its historical volatility, Real Return Fund is 2.82 times less risky than Perkins Mid. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Perkins Mid Cap is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,672  in Perkins Mid Cap on September 5, 2024 and sell it today you would earn a total of  134.00  from holding Perkins Mid Cap or generate 8.01% return on investment over 90 days.

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

Real Return Fund  vs.  Perkins Mid Cap

Real Return Fund

Risk-Adjusted Performance

0 of 100

Very Weak

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

Perkins Mid Cap

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Perkins Mid Cap are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Perkins Mid may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Real Return and Perkins Mid

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

The idea behind Real Return Fund and Perkins 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.

Check out your portfolio center.

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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.