Correlation Between Investec Emerging and Mid Cap

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

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

Diversification Opportunities for Investec Emerging and Mid Cap

0.13

Correlation Coefficient

Investec Emerging  Mid Cap

Average diversification

The 3 months correlation between Investec and Mid is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Investec Emerging Markets and Mid Cap 15x Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Cap 15x and Investec Emerging 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 Investec Emerging Markets 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 15x has no effect on the direction of Investec Emerging i.e., Investec Emerging and Mid Cap go up and down completely randomly.

Pair Corralation between Investec Emerging and Mid Cap

Assuming the 90 days horizon Investec Emerging Markets is expected to under-perform the Mid Cap. But the mutual fund apears to be less risky and, when comparing its historical volatility, Investec Emerging Markets is 1.4 times less risky than Mid Cap. The mutual fund trades about -0.15 of its potential returns per unit of risk. The Mid Cap 15x Strategy is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  14,613  in Mid Cap 15x Strategy on September 12, 2024 and sell it today you would lose (247.00) from holding Mid Cap 15x Strategy or give up 1.69% of portfolio value over 90 days.

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

Investec Emerging Markets  vs.  Mid Cap 15x Strategy

Investec Emerging Markets

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Investec Emerging Markets are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Investec Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mid Cap 15x

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mid Cap 15x Strategy are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical indicators, Mid Cap showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Investec Emerging and Mid Cap

The main advantage of trading using opposite Investec Emerging and Mid Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investec Emerging 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 Investec Emerging Markets and Mid Cap 15x Strategy 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.