Correlation Between MidCap Financial and MACOM Technology
Can any of the company-specific risk be diversified away by investing in both MidCap Financial and MACOM Technology 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 MidCap Financial and MACOM Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MidCap Financial Investment and MACOM Technology Solutions, you can compare the effects of market volatilities on MidCap Financial and MACOM Technology 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 MidCap Financial with a short position of MACOM Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of MidCap Financial and MACOM Technology.
Diversification Opportunities for MidCap Financial and MACOM Technology
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MidCap and MACOM is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding MidCap Financial Investment and MACOM Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MACOM Technology Sol and MidCap Financial 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 MidCap Financial Investment are associated (or correlated) with MACOM Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MACOM Technology Sol has no effect on the direction of MidCap Financial i.e., MidCap Financial and MACOM Technology go up and down completely randomly.
Pair Corralation between MidCap Financial and MACOM Technology
Assuming the 90 days trading horizon MidCap Financial is expected to generate 1.95 times less return on investment than MACOM Technology. But when comparing it to its historical volatility, MidCap Financial Investment is 2.48 times less risky than MACOM Technology. It trades about 0.15 of its potential returns per unit of risk. MACOM Technology Solutions is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 8,700 in MACOM Technology Solutions on November 3, 2024 and sell it today you would earn a total of 4,000 from holding MACOM Technology Solutions or generate 45.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MidCap Financial Investment vs. MACOM Technology Solutions
Performance |
| Timeline |
| MidCap Financial Inv |
| MACOM Technology Sol |
MidCap Financial and MACOM Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MidCap Financial and MACOM Technology
The main advantage of trading using opposite MidCap Financial and MACOM Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MidCap Financial position performs unexpectedly, MACOM Technology 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 MACOM Technology will offset losses from the drop in MACOM Technology's long position.| MidCap Financial vs. SIVERS SEMICONDUCTORS AB | MidCap Financial vs. NorAm Drilling AS | MidCap Financial vs. Volkswagen AG | MidCap Financial vs. Darden Restaurants |
| MACOM Technology vs. InPlay Oil Corp | MACOM Technology vs. Playtech plc | MACOM Technology vs. PLAYWAY SA ZY 10 | MACOM Technology vs. Firan Technology Group |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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