Correlation Between Mid Cap and Investment Managers

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

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

Diversification Opportunities for Mid Cap and Investment Managers

-0.3

Correlation Coefficient

Mid Cap  Investment Managers

Very good diversification

The 3 months correlation between Mid and Investment is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Growth and Investment Managers Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment Managers and Mid Cap 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 Growth are associated (or correlated) with Investment Managers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment Managers has no effect on the direction of Mid Cap i.e., Mid Cap and Investment Managers go up and down completely randomly.

Pair Corralation between Mid Cap and Investment Managers

Assuming the 90 days horizon Mid Cap is expected to generate 1.02 times less return on investment than Investment Managers. But when comparing it to its historical volatility, Mid Cap Growth is 1.69 times less risky than Investment Managers. It trades about 0.1 of its potential returns per unit of risk. Investment Managers Series is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  745.00  in Investment Managers Series on October 8, 2024 and sell it today you would earn a total of  217.00  from holding Investment Managers Series or generate 29.13% return on investment over 90 days.

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

Mid Cap Growth  vs.  Investment Managers Series

Mid Cap Growth

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mid Cap Growth are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Mid Cap may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Investment Managers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Investment Managers Series 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.

Pair Trading with Mid Cap and Investment Managers

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

The idea behind Mid Cap Growth and Investment Managers Series 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.