Correlation Between Mid Cap and Munivest Fund

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

Diversification Opportunities for Mid Cap and Munivest Fund

0.39

Correlation Coefficient

Mid Cap  Munivest Fund

Weak diversification

The 3 months correlation between Mid and Munivest is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Growth and Munivest Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Munivest Fund 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 Munivest Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Munivest Fund has no effect on the direction of Mid Cap i.e., Mid Cap and Munivest Fund go up and down completely randomly.

Pair Corralation between Mid Cap and Munivest Fund

Assuming the 90 days horizon Mid Cap Growth is expected to under-perform the Munivest Fund. In addition to that, Mid Cap is 2.53 times more volatile than Munivest Fund. It trades about -0.08 of its total potential returns per unit of risk. Munivest Fund is currently generating about 0.04 per unit of volatility. If you would invest  691.00  in Munivest Fund on December 28, 2024 and sell it today you would earn a total of  12.00  from holding Munivest Fund or generate 1.74% return on investment over 90 days.

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

Mid Cap Growth  vs.  Munivest Fund

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.

Munivest Fund

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Munivest Fund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly stable basic indicators, Munivest Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Mid Cap and Munivest Fund

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

The idea behind Mid Cap Growth and Munivest Fund 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 Correlations module to find global opportunities by holding instruments from different markets.