Correlation Between MidCap Financial and CEZ A
Can any of the company-specific risk be diversified away by investing in both MidCap Financial and CEZ A 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 CEZ A 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 CEZ a s, you can compare the effects of market volatilities on MidCap Financial and CEZ A 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 CEZ A. Check out your portfolio center. Please also check ongoing floating volatility patterns of MidCap Financial and CEZ A.
Diversification Opportunities for MidCap Financial and CEZ A
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MidCap and CEZ is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding MidCap Financial Investment and CEZ a s in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEZ a s 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 CEZ A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEZ a s has no effect on the direction of MidCap Financial i.e., MidCap Financial and CEZ A go up and down completely randomly.
Pair Corralation between MidCap Financial and CEZ A
Assuming the 90 days trading horizon MidCap Financial is expected to generate 8.31 times less return on investment than CEZ A. But when comparing it to its historical volatility, MidCap Financial Investment is 1.6 times less risky than CEZ A. It trades about 0.06 of its potential returns per unit of risk. CEZ a s is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 3,768 in CEZ a s on November 2, 2024 and sell it today you would earn a total of 502.00 from holding CEZ a s or generate 13.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
MidCap Financial Investment vs. CEZ a s
Performance |
| Timeline |
| MidCap Financial Inv |
| CEZ a s |
MidCap Financial and CEZ A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MidCap Financial and CEZ A
The main advantage of trading using opposite MidCap Financial and CEZ A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MidCap Financial position performs unexpectedly, CEZ A 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 CEZ A will offset losses from the drop in CEZ A's long position.| MidCap Financial vs. Autohome ADR | MidCap Financial vs. The Home Depot | MidCap Financial vs. Addus HomeCare | MidCap Financial vs. MHP Hotel AG |
| CEZ A vs. THRACE PLASTICS | CEZ A vs. Plastic Omnium | CEZ A vs. Vulcan Materials | CEZ A vs. The Boston Beer |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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