Correlation Between Mid Cap and Standpoint Multi-asset

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

By analyzing existing cross correlation between Mid Cap Value and Standpoint Multi Asset, you can compare the effects of market volatilities on Mid Cap and Standpoint Multi-asset 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 Standpoint Multi-asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Standpoint Multi-asset.

Diversification Opportunities for Mid Cap and Standpoint Multi-asset

0.69

Correlation Coefficient

Mid Cap  Standpoint Multi-asset

Poor diversification

The 3 months correlation between Mid and Standpoint is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Value and Standpoint Multi Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standpoint Multi Asset 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 Value are associated (or correlated) with Standpoint Multi-asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standpoint Multi Asset has no effect on the direction of Mid Cap i.e., Mid Cap and Standpoint Multi-asset go up and down completely randomly.

Pair Corralation between Mid Cap and Standpoint Multi-asset

Assuming the 90 days horizon Mid Cap Value is expected to generate 1.37 times more return on investment than Standpoint Multi-asset. However, Mid Cap is 1.37 times more volatile than Standpoint Multi Asset. It trades about 0.17 of its potential returns per unit of risk. Standpoint Multi Asset is currently generating about 0.19 per unit of risk. If you would invest  1,501  in Mid Cap Value on April 25, 2025 and sell it today you would earn a total of  137.00  from holding Mid Cap Value or generate 9.13% return on investment over 90 days.

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

Mid Cap Value  vs.  Standpoint Multi Asset

Mid Cap Value

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mid Cap Value are ranked lower than 13 (%) 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 August 2025.

Standpoint Multi Asset

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Standpoint Multi Asset are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Standpoint Multi-asset may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Mid Cap and Standpoint Multi-asset

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

The idea behind Mid Cap Value and Standpoint Multi Asset 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.