Correlation Between Muirfield Fund and Commerce Midcap

Can any of the company-specific risk be diversified away by investing in both Muirfield Fund and Commerce Midcap 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 Muirfield Fund and Commerce Midcap into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Muirfield Fund Retail and Commerce Midcap Value, you can compare the effects of market volatilities on Muirfield Fund and Commerce Midcap 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 Muirfield Fund with a short position of Commerce Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Muirfield Fund and Commerce Midcap.

Diversification Opportunities for Muirfield Fund and Commerce Midcap

0.94

Correlation Coefficient

Muirfield Fund  Commerce Midcap

Almost no diversification

The 3 months correlation between Muirfield and Commerce is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Muirfield Fund Retail and Commerce Midcap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commerce Midcap Value and Muirfield Fund 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 Muirfield Fund Retail are associated (or correlated) with Commerce Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commerce Midcap Value has no effect on the direction of Muirfield Fund i.e., Muirfield Fund and Commerce Midcap go up and down completely randomly.

Pair Corralation between Muirfield Fund and Commerce Midcap

Assuming the 90 days horizon Muirfield Fund is expected to generate 1.44 times less return on investment than Commerce Midcap. But when comparing it to its historical volatility, Muirfield Fund Retail is 1.08 times less risky than Commerce Midcap. It trades about 0.12 of its potential returns per unit of risk. Commerce Midcap Value is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,483  in Commerce Midcap Value on September 2, 2024 and sell it today you would earn a total of  208.00  from holding Commerce Midcap Value or generate 8.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Muirfield Fund Retail  vs.  Commerce Midcap Value

Muirfield Fund Retail

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Muirfield Fund Retail are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Muirfield Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Commerce Midcap Value

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Commerce Midcap Value are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Commerce Midcap may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Muirfield Fund and Commerce Midcap

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

The idea behind Muirfield Fund Retail and Commerce Midcap Value 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.