Correlation Between Midcap Fund and Mid Cap

Can any of the company-specific risk be diversified away by investing in both Midcap Fund 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 Midcap Fund and Mid Cap 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 Mid Cap Growth, you can compare the effects of market volatilities on Midcap Fund 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 Midcap Fund with a short position of Mid Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Midcap Fund and Mid Cap.

Diversification Opportunities for Midcap Fund and Mid Cap

0.28

Correlation Coefficient

Midcap Fund  Mid Cap

Modest diversification

The 3 months correlation between Midcap and Mid is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Midcap Fund Class 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 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 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 Midcap Fund i.e., Midcap Fund and Mid Cap go up and down completely randomly.

Pair Corralation between Midcap Fund and Mid Cap

Assuming the 90 days horizon Midcap Fund Class is expected to under-perform the Mid Cap. But the mutual fund apears to be less risky and, when comparing its historical volatility, Midcap Fund Class is 1.55 times less risky than Mid Cap. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Mid Cap Growth is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,325  in Mid Cap Growth on July 3, 2025 and sell it today you would earn a total of  35.00  from holding Mid Cap Growth or generate 2.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Midcap Fund Class  vs.  Mid Cap Growth

Midcap Fund Class

Risk-Adjusted Performance

Weakest

Over the last 90 days Midcap Fund Class has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Midcap Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mid Cap Growth

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Mid Cap Growth are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Mid Cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Midcap Fund and Mid Cap

The main advantage of trading using opposite Midcap Fund and Mid Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Midcap Fund 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 Midcap Fund Class 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.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.