Correlation Between Balanced Strategy and Mid-cap Profund

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

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

Diversification Opportunities for Balanced Strategy and Mid-cap Profund

0.91

Correlation Coefficient

Balanced Strategy  Mid-cap Profund

Almost no diversification

The 3 months correlation between Balanced and Mid-cap is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Strategy Fund and Mid Cap Profund Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Cap Profund and Balanced Strategy 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 Balanced Strategy Fund are associated (or correlated) with Mid-cap Profund. 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 Profund has no effect on the direction of Balanced Strategy i.e., Balanced Strategy and Mid-cap Profund go up and down completely randomly.

Pair Corralation between Balanced Strategy and Mid-cap Profund

Assuming the 90 days horizon Balanced Strategy is expected to generate 1.19 times less return on investment than Mid-cap Profund. But when comparing it to its historical volatility, Balanced Strategy Fund is 2.2 times less risky than Mid-cap Profund. It trades about 0.26 of its potential returns per unit of risk. Mid Cap Profund Mid Cap is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  11,898  in Mid Cap Profund Mid Cap on May 28, 2025 and sell it today you would earn a total of  931.00  from holding Mid Cap Profund Mid Cap or generate 7.82% return on investment over 90 days.

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

Balanced Strategy Fund  vs.  Mid Cap Profund Mid Cap

Balanced Strategy

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Balanced Strategy Fund are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Balanced Strategy may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Mid Cap Profund

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Mid Cap Profund Mid Cap are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Mid-cap Profund may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Balanced Strategy and Mid-cap Profund

The main advantage of trading using opposite Balanced Strategy and Mid-cap Profund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Strategy position performs unexpectedly, Mid-cap Profund 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 Profund will offset losses from the drop in Mid-cap Profund's long position.

The idea behind Balanced Strategy Fund and Mid Cap Profund 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.