Correlation Between Midcap Fund and Locorr Strategic

Can any of the company-specific risk be diversified away by investing in both Midcap Fund and Locorr Strategic 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 Midcap Fund and Locorr Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Midcap Fund Class and Locorr Strategic Allocation, you can compare the effects of market volatilities on Midcap Fund and Locorr Strategic 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 Midcap Fund with a short position of Locorr Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Midcap Fund and Locorr Strategic.

Diversification Opportunities for Midcap Fund and Locorr Strategic

0.35

Correlation Coefficient

Midcap Fund  Locorr Strategic

Weak diversification

The 3 months correlation between Midcap and Locorr is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Midcap Fund Class and Locorr Strategic Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Locorr Strategic All and Midcap Fund 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 Midcap Fund Class are associated (or correlated) with Locorr Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Locorr Strategic All has no effect on the direction of Midcap Fund i.e., Midcap Fund and Locorr Strategic go up and down completely randomly.

Pair Corralation between Midcap Fund and Locorr Strategic

Assuming the 90 days horizon Midcap Fund Class is expected to generate 1.95 times more return on investment than Locorr Strategic. However, Midcap Fund is 1.95 times more volatile than Locorr Strategic Allocation. It trades about 0.19 of its potential returns per unit of risk. Locorr Strategic Allocation is currently generating about 0.3 per unit of risk. If you would invest  4,219  in Midcap Fund Class on April 30, 2025 and sell it today you would earn a total of  408.00  from holding Midcap Fund Class or generate 9.67% return on investment over 90 days.

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

Midcap Fund Class  vs.  Locorr Strategic Allocation

Midcap Fund Class

Risk-Adjusted Performance

Good

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

Locorr Strategic All

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Locorr Strategic Allocation are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Locorr Strategic may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Midcap Fund and Locorr Strategic

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

The idea behind Midcap Fund Class and Locorr Strategic Allocation 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.