Correlation Between Mid Cap and Core Fixed
Can any of the company-specific risk be diversified away by investing in both Mid Cap and Core Fixed 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 Core Fixed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mid Cap Growth and Core Fixed Income, you can compare the effects of market volatilities on Mid Cap and Core Fixed 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 Core Fixed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Core Fixed.
Diversification Opportunities for Mid Cap and Core Fixed
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mid and Core is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Growth and Core Fixed Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Fixed Income 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 Growth are associated (or correlated) with Core Fixed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Fixed Income has no effect on the direction of Mid Cap i.e., Mid Cap and Core Fixed go up and down completely randomly.
Pair Corralation between Mid Cap and Core Fixed
Assuming the 90 days horizon Mid Cap Growth is expected to generate 4.62 times more return on investment than Core Fixed. However, Mid Cap is 4.62 times more volatile than Core Fixed Income. It trades about 0.28 of its potential returns per unit of risk. Core Fixed Income is currently generating about 0.05 per unit of risk. If you would invest 2,136 in Mid Cap Growth on April 26, 2025 and sell it today you would earn a total of 537.00 from holding Mid Cap Growth or generate 25.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Mid Cap Growth vs. Core Fixed Income
Performance |
Timeline |
Mid Cap Growth |
Core Fixed Income |
Mid Cap and Core Fixed Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Mid Cap and Core Fixed
The main advantage of trading using opposite Mid Cap and Core Fixed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap position performs unexpectedly, Core Fixed 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 Core Fixed will offset losses from the drop in Core Fixed's long position.Mid Cap vs. Growth Portfolio Class | Mid Cap vs. Small Pany Growth | Mid Cap vs. Emerging Markets Portfolio | Mid Cap vs. Morgan Stanley Multi |
Core Fixed vs. Gamco Global Telecommunications | Core Fixed vs. John Hancock Municipal | Core Fixed vs. Old Westbury Municipal | Core Fixed vs. Dunham Porategovernment Bond |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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