Correlation Between Zacks Dividend and Congress Mid

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

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

Diversification Opportunities for Zacks Dividend and Congress Mid

0.71

Correlation Coefficient

Zacks Dividend  Congress Mid

Poor diversification

The 3 months correlation between Zacks and Congress is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Zacks Dividend Fund and Congress Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Congress Mid Cap and Zacks Dividend 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 Zacks Dividend Fund are associated (or correlated) with Congress Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Congress Mid Cap has no effect on the direction of Zacks Dividend i.e., Zacks Dividend and Congress Mid go up and down completely randomly.

Pair Corralation between Zacks Dividend and Congress Mid

Assuming the 90 days horizon Zacks Dividend is expected to generate 2.0 times less return on investment than Congress Mid. But when comparing it to its historical volatility, Zacks Dividend Fund is 1.4 times less risky than Congress Mid. It trades about 0.03 of its potential returns per unit of risk. Congress Mid Cap is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,013  in Congress Mid Cap on February 7, 2024 and sell it today you would earn a total of  500.00  from holding Congress Mid Cap or generate 24.84% return on investment over 90 days.

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

Zacks Dividend Fund  vs.  Congress Mid Cap

Zacks Dividend

Risk-Adjusted Performance

6 of 100

OK

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

Congress Mid Cap

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Zacks Dividend and Congress Mid

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

The idea behind Zacks Dividend Fund and Congress Mid Cap 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.