Correlation Between Mid Cap and Domini Impact

Can any of the company-specific risk be diversified away by investing in both Mid Cap and Domini Impact 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 Domini Impact 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 Domini Impact International, you can compare the effects of market volatilities on Mid Cap and Domini Impact 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 Domini Impact. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Domini Impact.

Diversification Opportunities for Mid Cap and Domini Impact

0.82

Correlation Coefficient

Mid Cap  Domini Impact

Very poor diversification

The 3 months correlation between Mid and Domini is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Growth and Domini Impact International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Domini Impact Intern 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 Domini Impact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Domini Impact Intern has no effect on the direction of Mid Cap i.e., Mid Cap and Domini Impact go up and down completely randomly.

Pair Corralation between Mid Cap and Domini Impact

Assuming the 90 days horizon Mid Cap is expected to generate 1.41 times less return on investment than Domini Impact. In addition to that, Mid Cap is 1.11 times more volatile than Domini Impact International. It trades about 0.09 of its total potential returns per unit of risk. Domini Impact International is currently generating about 0.15 per unit of volatility. If you would invest  1,001  in Domini Impact International on May 15, 2025 and sell it today you would earn a total of  74.00  from holding Domini Impact International or generate 7.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

Mid Cap Growth  vs.  Domini Impact International

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 strong basic indicators, Mid Cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Domini Impact Intern

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Domini Impact International are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Domini Impact may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Mid Cap and Domini Impact

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

The idea behind Mid Cap Growth and Domini Impact International 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.