Correlation Between Sp Midcap and Sp Smallcap
Can any of the company-specific risk be diversified away by investing in both Sp Midcap and Sp Smallcap 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 Sp Midcap and Sp Smallcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sp Midcap Index and Sp Smallcap Index, you can compare the effects of market volatilities on Sp Midcap and Sp Smallcap 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 Sp Midcap with a short position of Sp Smallcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sp Midcap and Sp Smallcap.
Diversification Opportunities for Sp Midcap and Sp Smallcap
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SPMIX and SMLKX is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Sp Midcap Index and Sp Smallcap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sp Smallcap Index and Sp Midcap 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 Sp Midcap Index are associated (or correlated) with Sp Smallcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sp Smallcap Index has no effect on the direction of Sp Midcap i.e., Sp Midcap and Sp Smallcap go up and down completely randomly.
Pair Corralation between Sp Midcap and Sp Smallcap
Assuming the 90 days horizon Sp Midcap is expected to generate 1.11 times less return on investment than Sp Smallcap. But when comparing it to its historical volatility, Sp Midcap Index is 1.13 times less risky than Sp Smallcap. It trades about 0.22 of its potential returns per unit of risk. Sp Smallcap Index is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,743 in Sp Smallcap Index on April 15, 2025 and sell it today you would earn a total of 297.00 from holding Sp Smallcap Index or generate 17.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sp Midcap Index vs. Sp Smallcap Index
Performance |
| Timeline |
| Sp Midcap Index |
| Sp Smallcap Index |
Sp Midcap and Sp Smallcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sp Midcap and Sp Smallcap
The main advantage of trading using opposite Sp Midcap and Sp Smallcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sp Midcap position performs unexpectedly, Sp Smallcap 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 Sp Smallcap will offset losses from the drop in Sp Smallcap's long position.| Sp Midcap vs. Jpmorgan High Yield | Sp Midcap vs. Fidelity Capital Income | Sp Midcap vs. Siit High Yield | Sp Midcap vs. Transamerica High Yield |
| Sp Smallcap vs. Intermediate Government Bond | Sp Smallcap vs. Aig Government Money | Sp Smallcap vs. Elfun Government Money | Sp Smallcap vs. Dunham Porategovernment Bond |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |