Correlation Between Smallcap Growth and Midcap Fund
Can any of the company-specific risk be diversified away by investing in both Smallcap Growth and Midcap Fund 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 Smallcap Growth and Midcap Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smallcap Growth Fund and Midcap Fund Class, you can compare the effects of market volatilities on Smallcap Growth and Midcap Fund 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 Smallcap Growth with a short position of Midcap Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Growth and Midcap Fund.
Diversification Opportunities for Smallcap Growth and Midcap Fund
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Smallcap and Midcap is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Growth Fund and Midcap Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midcap Fund Class and Smallcap Growth 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 Smallcap Growth Fund are associated (or correlated) with Midcap Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midcap Fund Class has no effect on the direction of Smallcap Growth i.e., Smallcap Growth and Midcap Fund go up and down completely randomly.
Pair Corralation between Smallcap Growth and Midcap Fund
Assuming the 90 days horizon Smallcap Growth Fund is expected to generate 1.34 times more return on investment than Midcap Fund. However, Smallcap Growth is 1.34 times more volatile than Midcap Fund Class. It trades about 0.16 of its potential returns per unit of risk. Midcap Fund Class is currently generating about 0.11 per unit of risk. If you would invest 1,419 in Smallcap Growth Fund on May 26, 2025 and sell it today you would earn a total of 150.00 from holding Smallcap Growth Fund or generate 10.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smallcap Growth Fund vs. Midcap Fund Class
Performance |
| Timeline |
| Smallcap Growth |
| Midcap Fund Class |
Smallcap Growth and Midcap Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap Growth and Midcap Fund
The main advantage of trading using opposite Smallcap Growth and Midcap Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap Growth position performs unexpectedly, Midcap Fund 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 Midcap Fund will offset losses from the drop in Midcap Fund's long position.| Smallcap Growth vs. Goldman Sachs Small | Smallcap Growth vs. Vanguard Small Cap Value | Smallcap Growth vs. Valic Company I | Smallcap Growth vs. Northern Small Cap |
| Midcap Fund vs. Ab Bond Inflation | Midcap Fund vs. Lord Abbett Inflation | Midcap Fund vs. Ab Bond Inflation | Midcap Fund vs. Short Duration Inflation |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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