Correlation Between Small Company and Congress Mid

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

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

Diversification Opportunities for Small Company and Congress Mid

0.7

Correlation Coefficient

Small Company  Congress Mid

Poor diversification

The 3 months correlation between Small and Congress is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Small Pany 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 Small Company 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 Small Pany 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 Small Company i.e., Small Company and Congress Mid go up and down completely randomly.

Pair Corralation between Small Company and Congress Mid

Assuming the 90 days horizon Small Pany Fund is expected to generate 1.05 times more return on investment than Congress Mid. However, Small Company is 1.05 times more volatile than Congress Mid Cap. It trades about 0.05 of its potential returns per unit of risk. Congress Mid Cap is currently generating about -0.14 per unit of risk. If you would invest  2,937  in Small Pany Fund on September 3, 2025 and sell it today you would earn a total of  37.00  from holding Small Pany Fund or generate 1.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Small Pany Fund  vs.  Congress Mid Cap

Small Pany Fund

Risk-Adjusted Performance

Weakest

Over the last 90 days Small Pany Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Small Company 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

Weakest

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 Small Company and Congress Mid

The main advantage of trading using opposite Small Company and Congress Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Company 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 Small Pany 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.