Correlation Between Mid-cap 15x and Global Concentrated

Can any of the company-specific risk be diversified away by investing in both Mid-cap 15x and Global Concentrated 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 Mid-cap 15x and Global Concentrated into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mid Cap 15x Strategy and Global Centrated Portfolio, you can compare the effects of market volatilities on Mid-cap 15x and Global Concentrated 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 Mid-cap 15x with a short position of Global Concentrated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid-cap 15x and Global Concentrated.

Diversification Opportunities for Mid-cap 15x and Global Concentrated

0.91

Correlation Coefficient

Mid-cap 15x  Global Concentrated

Almost no diversification

The 3 months correlation between Mid-cap and Global is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap 15x Strategy and Global Centrated Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Centrated Por and Mid-cap 15x 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 Mid Cap 15x Strategy are associated (or correlated) with Global Concentrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Centrated Por has no effect on the direction of Mid-cap 15x i.e., Mid-cap 15x and Global Concentrated go up and down completely randomly.

Pair Corralation between Mid-cap 15x and Global Concentrated

Assuming the 90 days horizon Mid Cap 15x Strategy is expected to under-perform the Global Concentrated. In addition to that, Mid-cap 15x is 1.72 times more volatile than Global Centrated Portfolio. It trades about -0.23 of its total potential returns per unit of risk. Global Centrated Portfolio is currently generating about -0.18 per unit of volatility. If you would invest  2,296  in Global Centrated Portfolio on October 11, 2024 and sell it today you would lose (76.00) from holding Global Centrated Portfolio or give up 3.31% of portfolio value over 90 days.

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

Mid Cap 15x Strategy  vs.  Global Centrated Portfolio

Mid Cap 15x

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mid Cap 15x Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical indicators, Mid-cap 15x is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Global Centrated Por

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Mid-cap 15x and Global Concentrated

The main advantage of trading using opposite Mid-cap 15x and Global Concentrated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid-cap 15x position performs unexpectedly, Global Concentrated 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 Global Concentrated will offset losses from the drop in Global Concentrated's long position.

The idea behind Mid Cap 15x Strategy and Global Centrated Portfolio 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..