Correlation Between Hewitt Money and Mid Cap

Can any of the company-specific risk be diversified away by investing in both Hewitt Money 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 Hewitt Money and Mid Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hewitt Money Market and Mid Cap Profund Mid Cap, you can compare the effects of market volatilities on Hewitt Money 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 Hewitt Money with a short position of Mid Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hewitt Money and Mid Cap.

Diversification Opportunities for Hewitt Money and Mid Cap

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Correlation Coefficient

Hewitt Money  Mid Cap

Pay attention - limited upside

The 3 months correlation between Hewitt and Mid is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hewitt Money Market and Mid Cap Profund Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Cap Profund and Hewitt Money 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 Hewitt Money Market 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 Profund has no effect on the direction of Hewitt Money i.e., Hewitt Money and Mid Cap go up and down completely randomly.

Pair Corralation between Hewitt Money and Mid Cap

Assuming the 90 days horizon Hewitt Money is expected to generate 2.27 times less return on investment than Mid Cap. But when comparing it to its historical volatility, Hewitt Money Market is 1.2 times less risky than Mid Cap. It trades about 0.02 of its potential returns per unit of risk. Mid Cap Profund Mid Cap is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  7,949  in Mid Cap Profund Mid Cap on September 30, 2024 and sell it today you would earn a total of  1,791  from holding Mid Cap Profund Mid Cap or generate 22.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.61%
Values	Daily Returns

Hewitt Money Market  vs.  Mid Cap Profund Mid Cap

Hewitt Money Market

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Hewitt Money Market has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Hewitt Money is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mid Cap Profund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mid Cap Profund Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. 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.

Pair Trading with Hewitt Money and Mid Cap

The main advantage of trading using opposite Hewitt Money and Mid Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hewitt Money 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.

The idea behind Hewitt Money Market and Mid Cap Profund Mid Cap 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.