Correlation Between Litman Gregory and Mid Cap
Can any of the company-specific risk be diversified away by investing in both Litman Gregory 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 Litman Gregory and Mid Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Litman Gregory Masters and Mid Cap Growth Profund, you can compare the effects of market volatilities on Litman Gregory 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 Litman Gregory with a short position of Mid Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Litman Gregory and Mid Cap.
Diversification Opportunities for Litman Gregory and Mid Cap
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Litman and Mid is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Litman Gregory Masters and Mid Cap Growth Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Cap Growth and Litman Gregory 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 Litman Gregory Masters 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 Litman Gregory i.e., Litman Gregory and Mid Cap go up and down completely randomly.
Pair Corralation between Litman Gregory and Mid Cap
Assuming the 90 days horizon Litman Gregory Masters is expected to generate 0.77 times more return on investment than Mid Cap. However, Litman Gregory Masters is 1.3 times less risky than Mid Cap. It trades about 0.12 of its potential returns per unit of risk. Mid Cap Growth Profund is currently generating about 0.03 per unit of risk. If you would invest 2,064 in Litman Gregory Masters on August 30, 2025 and sell it today you would earn a total of 121.00 from holding Litman Gregory Masters or generate 5.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Litman Gregory Masters vs. Mid Cap Growth Profund
Performance |
| Timeline |
| Litman Gregory Masters |
| Mid Cap Growth |
Litman Gregory and Mid Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Litman Gregory and Mid Cap
The main advantage of trading using opposite Litman Gregory and Mid Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Litman Gregory 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.| Litman Gregory vs. Calvert Moderate Allocation | Litman Gregory vs. Sterling Capital Behavioral | Litman Gregory vs. Victory Rs Large | Litman Gregory vs. Franklin Moderate Allocation |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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