Correlation Between Mid Cap and The Henssler

Can any of the company-specific risk be diversified away by investing in both Mid Cap and The Henssler 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 The Henssler 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 The Henssler Equity, you can compare the effects of market volatilities on Mid Cap and The Henssler 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 The Henssler. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and The Henssler.

Diversification Opportunities for Mid Cap and The Henssler

0.14

Correlation Coefficient

Mid Cap  The Henssler

Average diversification

The 3 months correlation between Mid and The is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Growth and The Henssler Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henssler Equity 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 The Henssler. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henssler Equity has no effect on the direction of Mid Cap i.e., Mid Cap and The Henssler go up and down completely randomly.

Pair Corralation between Mid Cap and The Henssler

Assuming the 90 days horizon Mid Cap Growth is expected to under-perform the The Henssler. In addition to that, Mid Cap is 1.48 times more volatile than The Henssler Equity. It trades about -0.11 of its total potential returns per unit of risk. The Henssler Equity is currently generating about -0.15 per unit of volatility. If you would invest  508.00  in The Henssler Equity on December 17, 2024 and sell it today you would lose (52.00) from holding The Henssler Equity or give up 10.24% of portfolio value over 90 days.

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

Mid Cap Growth  vs.  The Henssler Equity

Mid Cap Growth

Risk-Adjusted Performance

Very Weak

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

Henssler Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Henssler Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental 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 The Henssler

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

The idea behind Mid Cap Growth and The Henssler Equity 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.