Correlation Between Smallcap Growth and Midcap Fund

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

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

Diversification Opportunities for Smallcap Growth and Midcap Fund

0.0

Correlation Coefficient

Smallcap Growth  Midcap Fund

Pay attention - limited upside

The 3 months correlation between Smallcap and Midcap is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Growth Fund and Midcap Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midcap Fund Class and Smallcap Growth 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 Smallcap Growth Fund are associated (or correlated) with Midcap Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midcap Fund Class has no effect on the direction of Smallcap Growth i.e., Smallcap Growth and Midcap Fund go up and down completely randomly.

Pair Corralation between Smallcap Growth and Midcap Fund

If you would invest (100.00) in Smallcap Growth Fund on August 26, 2025 and sell it today you would earn a total of  100.00  from holding Smallcap Growth Fund or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Smallcap Growth Fund  vs.  Midcap Fund Class

Smallcap Growth

Risk-Adjusted Performance

Weak

Over the last 90 days Smallcap Growth Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Smallcap Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Midcap Fund Class

Risk-Adjusted Performance

Weakest

Over the last 90 days Midcap Fund Class has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Smallcap Growth and Midcap Fund

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

The idea behind Smallcap Growth Fund and Midcap 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.