Correlation Between MEDICAL FACILITIES and MidCap Financial
Can any of the company-specific risk be diversified away by investing in both MEDICAL FACILITIES and MidCap Financial 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 MEDICAL FACILITIES and MidCap Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MEDICAL FACILITIES NEW and MidCap Financial Investment, you can compare the effects of market volatilities on MEDICAL FACILITIES and MidCap Financial 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 MEDICAL FACILITIES with a short position of MidCap Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of MEDICAL FACILITIES and MidCap Financial.
Diversification Opportunities for MEDICAL FACILITIES and MidCap Financial
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MEDICAL and MidCap is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding MEDICAL FACILITIES NEW and MidCap Financial Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MidCap Financial Inv and MEDICAL FACILITIES 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 MEDICAL FACILITIES NEW are associated (or correlated) with MidCap Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MidCap Financial Inv has no effect on the direction of MEDICAL FACILITIES i.e., MEDICAL FACILITIES and MidCap Financial go up and down completely randomly.
Pair Corralation between MEDICAL FACILITIES and MidCap Financial
Assuming the 90 days horizon MEDICAL FACILITIES NEW is expected to generate 1.78 times more return on investment than MidCap Financial. However, MEDICAL FACILITIES is 1.78 times more volatile than MidCap Financial Investment. It trades about 0.19 of its potential returns per unit of risk. MidCap Financial Investment is currently generating about 0.08 per unit of risk. If you would invest 1,011 in MEDICAL FACILITIES NEW on October 29, 2024 and sell it today you would earn a total of 69.00 from holding MEDICAL FACILITIES NEW or generate 6.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MEDICAL FACILITIES NEW vs. MidCap Financial Investment
Performance |
| Timeline |
| MEDICAL FACILITIES NEW |
| MidCap Financial Inv |
MEDICAL FACILITIES and MidCap Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MEDICAL FACILITIES and MidCap Financial
The main advantage of trading using opposite MEDICAL FACILITIES and MidCap Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MEDICAL FACILITIES position performs unexpectedly, MidCap Financial 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 Financial will offset losses from the drop in MidCap Financial's long position.| MEDICAL FACILITIES vs. Semiconductor Manufacturing International | MEDICAL FACILITIES vs. Ryanair Holdings plc | MEDICAL FACILITIES vs. Hua Hong Semiconductor | MEDICAL FACILITIES vs. GALENA MINING LTD |
| MidCap Financial vs. Tianjin Capital Environmental | MidCap Financial vs. SLR Investment Corp | MidCap Financial vs. Chuangs China Investments | MidCap Financial vs. CHAMPION IRON |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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