Correlation Between Teton Westwood and Mid Cap

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

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

Diversification Opportunities for Teton Westwood and Mid Cap

-0.29

Correlation Coefficient

Teton Westwood  Mid Cap

Very good diversification

The 3 months correlation between Teton and Mid is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Teton Westwood Equity and Mid Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Cap Growth and Teton Westwood 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 Teton Westwood Equity are associated (or correlated) with Mid Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Cap Growth has no effect on the direction of Teton Westwood i.e., Teton Westwood and Mid Cap go up and down completely randomly.

Pair Corralation between Teton Westwood and Mid Cap

Assuming the 90 days horizon Teton Westwood Equity is expected to generate 0.51 times more return on investment than Mid Cap. However, Teton Westwood Equity is 1.97 times less risky than Mid Cap. It trades about -0.24 of its potential returns per unit of risk. Mid Cap Growth is currently generating about -0.18 per unit of risk. If you would invest  1,140  in Teton Westwood Equity on October 10, 2024 and sell it today you would lose (43.00) from holding Teton Westwood Equity or give up 3.77% of portfolio value over 90 days.

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

Teton Westwood Equity  vs.  Mid Cap Growth

Teton Westwood Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teton Westwood Equity 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.

Mid Cap Growth

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mid Cap Growth are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Mid Cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Teton Westwood and Mid Cap

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

The idea behind Teton Westwood Equity and Mid Cap Growth 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.