Correlation Between Mid Cap and Issachar Fund

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

By analyzing existing cross correlation between Mid Cap 15x Strategy and Issachar Fund Class, you can compare the effects of market volatilities on Mid Cap and Issachar 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 Mid Cap with a short position of Issachar Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Issachar Fund.

Diversification Opportunities for Mid Cap and Issachar Fund

0.82

Correlation Coefficient

Mid Cap  Issachar Fund

Very poor diversification

The 3 months correlation between Mid and Issachar is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap 15x Strategy and Issachar Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Issachar Fund Class and Mid Cap 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 Mid Cap 15x Strategy are associated (or correlated) with Issachar Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Issachar Fund Class has no effect on the direction of Mid Cap i.e., Mid Cap and Issachar Fund go up and down completely randomly.

Pair Corralation between Mid Cap and Issachar Fund

Assuming the 90 days horizon Mid Cap 15x Strategy is expected to under-perform the Issachar Fund. In addition to that, Mid Cap is 1.21 times more volatile than Issachar Fund Class. It trades about -0.38 of its total potential returns per unit of risk. Issachar Fund Class is currently generating about -0.2 per unit of volatility. If you would invest  1,055  in Issachar Fund Class on September 26, 2024 and sell it today you would lose (52.00) from holding Issachar Fund Class or give up 4.93% of portfolio value over 90 days.

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

Mid Cap 15x Strategy  vs.  Issachar Fund Class

Mid Cap 15x

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mid Cap 15x Strategy are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical indicators, Mid Cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Issachar Fund Class

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Issachar Fund Class are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Issachar Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mid Cap and Issachar Fund

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

The idea behind Mid Cap 15x Strategy and Issachar Fund Class 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.