Correlation Between Global Core and Mid Cap

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

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

Diversification Opportunities for Global Core and Mid Cap

0.68

Correlation Coefficient

Global Core  Mid Cap

Poor diversification

The 3 months correlation between Global and Mid is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Global E Portfolio 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 Global Core 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 Global E Portfolio 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 Global Core i.e., Global Core and Mid Cap go up and down completely randomly.

Pair Corralation between Global Core and Mid Cap

Assuming the 90 days horizon Global E Portfolio is expected to generate 0.48 times more return on investment than Mid Cap. However, Global E Portfolio is 2.07 times less risky than Mid Cap. It trades about 0.22 of its potential returns per unit of risk. Mid Cap Growth is currently generating about 0.09 per unit of risk. If you would invest  2,273  in Global E Portfolio on July 9, 2025 and sell it today you would earn a total of  205.00  from holding Global E Portfolio or generate 9.02% return on investment over 90 days.

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

Global E Portfolio  vs.  Mid Cap Growth

Global E Portfolio

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global E Portfolio are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Global Core may actually be approaching a critical reversion point that can send shares even higher in November 2025.

Mid Cap Growth

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Mid Cap Growth are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Mid Cap may actually be approaching a critical reversion point that can send shares even higher in November 2025.

Pair Trading with Global Core and Mid Cap

The main advantage of trading using opposite Global Core and Mid Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Core 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 Global E Portfolio 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.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.