Correlation Between Mid Cap and William Blair

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

By analyzing existing cross correlation between Mid Cap Growth and William Blair International, you can compare the effects of market volatilities on Mid Cap and William Blair 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 William Blair. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and William Blair.

Diversification Opportunities for Mid Cap and William Blair

0.81

Correlation Coefficient

Mid Cap  William Blair

Very poor diversification

The 3 months correlation between Mid and William is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Growth and William Blair International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on William Blair Intern 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 Growth are associated (or correlated) with William Blair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of William Blair Intern has no effect on the direction of Mid Cap i.e., Mid Cap and William Blair go up and down completely randomly.

Pair Corralation between Mid Cap and William Blair

Assuming the 90 days horizon Mid Cap Growth is expected to generate 1.52 times more return on investment than William Blair. However, Mid Cap is 1.52 times more volatile than William Blair International. It trades about 0.05 of its potential returns per unit of risk. William Blair International is currently generating about 0.04 per unit of risk. If you would invest  2,897  in Mid Cap Growth on February 14, 2025 and sell it today you would earn a total of  1,046  from holding Mid Cap Growth or generate 36.11% return on investment over 90 days.

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

Mid Cap Growth  vs.  William Blair International

Mid Cap Growth

Risk-Adjusted Performance

Very Weak

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

William Blair Intern

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in William Blair International are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, William Blair 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 William Blair

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

The idea behind Mid Cap Growth and William Blair International 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.