Correlation Between MidCap Financial and High Liner
Can any of the company-specific risk be diversified away by investing in both MidCap Financial and High Liner 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 High Liner 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 High Liner Foods, you can compare the effects of market volatilities on MidCap Financial and High Liner 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 High Liner. Check out your portfolio center. Please also check ongoing floating volatility patterns of MidCap Financial and High Liner.
Diversification Opportunities for MidCap Financial and High Liner
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between MidCap and High is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding MidCap Financial Investment and High Liner Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Liner Foods 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 High Liner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Liner Foods has no effect on the direction of MidCap Financial i.e., MidCap Financial and High Liner go up and down completely randomly.
Pair Corralation between MidCap Financial and High Liner
Assuming the 90 days trading horizon MidCap Financial Investment is expected to generate 0.83 times more return on investment than High Liner. However, MidCap Financial Investment is 1.2 times less risky than High Liner. It trades about 0.05 of its potential returns per unit of risk. High Liner Foods is currently generating about -0.08 per unit of risk. If you would invest 1,300 in MidCap Financial Investment on October 25, 2024 and sell it today you would earn a total of 11.00 from holding MidCap Financial Investment or generate 0.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MidCap Financial Investment vs. High Liner Foods
Performance |
| Timeline |
| MidCap Financial Inv |
| High Liner Foods |
MidCap Financial and High Liner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MidCap Financial and High Liner
The main advantage of trading using opposite MidCap Financial and High Liner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MidCap Financial position performs unexpectedly, High Liner 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 High Liner will offset losses from the drop in High Liner's long position.| MidCap Financial vs. ANTA SPORTS PRODUCT | MidCap Financial vs. COLUMBIA SPORTSWEAR | MidCap Financial vs. ON SEMICONDUCTOR | MidCap Financial vs. PLAY2CHILL SA ZY |
| High Liner vs. General Mills | High Liner vs. Danone SA | High Liner vs. Hormel Foods | High Liner vs. Kellogg Company |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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