Correlation Between Mairs Power and Thompson Largecap

Can any of the company-specific risk be diversified away by investing in both Mairs Power and Thompson Largecap 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 Mairs Power and Thompson Largecap into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mairs Power Growth and Thompson Largecap Fund, you can compare the effects of market volatilities on Mairs Power and Thompson Largecap 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 Mairs Power with a short position of Thompson Largecap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mairs Power and Thompson Largecap.

Diversification Opportunities for Mairs Power and Thompson Largecap

0.93

Correlation Coefficient

Mairs Power  Thompson Largecap

Almost no diversification

The 3 months correlation between Mairs and Thompson is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Mairs Power Growth and Thompson Largecap Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thompson Largecap and Mairs Power 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 Mairs Power Growth are associated (or correlated) with Thompson Largecap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thompson Largecap has no effect on the direction of Mairs Power i.e., Mairs Power and Thompson Largecap go up and down completely randomly.

Pair Corralation between Mairs Power and Thompson Largecap

Assuming the 90 days horizon Mairs Power Growth is expected to generate 0.97 times more return on investment than Thompson Largecap. However, Mairs Power Growth is 1.03 times less risky than Thompson Largecap. It trades about 0.13 of its potential returns per unit of risk. Thompson Largecap Fund is currently generating about 0.09 per unit of risk. If you would invest  15,598  in Mairs Power Growth on February 22, 2024 and sell it today you would earn a total of  881.00  from holding Mairs Power Growth or generate 5.65% return on investment over 90 days.

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

Mairs Power Growth  vs.  Thompson Largecap Fund

Mairs Power Growth

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mairs Power Growth 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, Mairs Power is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Thompson Largecap

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Mairs Power and Thompson Largecap

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

The idea behind Mairs Power Growth and Thompson Largecap Fund 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.