Correlation Between Thompson Midcap and Perkins Select
Can any of the company-specific risk be diversified away by investing in both Thompson Midcap and Perkins Select 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 Thompson Midcap and Perkins Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thompson Midcap Fund and Perkins Select Value, you can compare the effects of market volatilities on Thompson Midcap and Perkins Select 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 Thompson Midcap with a short position of Perkins Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thompson Midcap and Perkins Select.
Diversification Opportunities for Thompson Midcap and Perkins Select
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Thompson and Perkins is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Thompson Midcap Fund and Perkins Select Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perkins Select Value and Thompson Midcap 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 Thompson Midcap Fund are associated (or correlated) with Perkins Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perkins Select Value has no effect on the direction of Thompson Midcap i.e., Thompson Midcap and Perkins Select go up and down completely randomly.
Pair Corralation between Thompson Midcap and Perkins Select
Assuming the 90 days horizon Thompson Midcap is expected to generate 5.14 times less return on investment than Perkins Select. In addition to that, Thompson Midcap is 1.14 times more volatile than Perkins Select Value. It trades about 0.03 of its total potential returns per unit of risk. Perkins Select Value is currently generating about 0.2 per unit of volatility. If you would invest 1,493 in Perkins Select Value on February 20, 2024 and sell it today you would earn a total of 150.00 from holding Perkins Select Value or generate 10.05% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Thompson Midcap Fund vs. Perkins Select Value
Performance |
Timeline |
Thompson Midcap |
Perkins Select Value |
Thompson Midcap and Perkins Select Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Thompson Midcap and Perkins Select
The main advantage of trading using opposite Thompson Midcap and Perkins Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thompson Midcap position performs unexpectedly, Perkins Select 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 Perkins Select will offset losses from the drop in Perkins Select's long position.Thompson Midcap vs. Thompson Bond Fund | Thompson Midcap vs. Perkins Select Value | Thompson Midcap vs. Hodges Small Cap |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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