Correlation Between Midcap Fund and Jackson Square

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

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

Diversification Opportunities for Midcap Fund and Jackson Square

0.96

Correlation Coefficient

Midcap Fund  Jackson Square

Almost no diversification

The 3 months correlation between Midcap and Jackson is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Midcap Fund Institutional and Jackson Square Smid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jackson Square Smid and Midcap 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 Midcap Fund Institutional are associated (or correlated) with Jackson Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jackson Square Smid has no effect on the direction of Midcap Fund i.e., Midcap Fund and Jackson Square go up and down completely randomly.

Pair Corralation between Midcap Fund and Jackson Square

Assuming the 90 days horizon Midcap Fund is expected to generate 1.14 times less return on investment than Jackson Square. But when comparing it to its historical volatility, Midcap Fund Institutional is 1.44 times less risky than Jackson Square. It trades about 0.17 of its potential returns per unit of risk. Jackson Square Smid Cap is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,805  in Jackson Square Smid Cap on September 13, 2024 and sell it today you would earn a total of  182.00  from holding Jackson Square Smid Cap or generate 10.08% return on investment over 90 days.

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

Midcap Fund Institutional  vs.  Jackson Square Smid Cap

Midcap Fund Institutional

Risk-Adjusted Performance

13 of 100

Good

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

Jackson Square Smid

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jackson Square Smid Cap are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Jackson Square may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Midcap Fund and Jackson Square

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

The idea behind Midcap Fund Institutional and Jackson Square Smid 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.