Correlation Between MidCap Financial and Adtalem Global
Can any of the company-specific risk be diversified away by investing in both MidCap Financial and Adtalem Global 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 Adtalem Global 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 Adtalem Global Education, you can compare the effects of market volatilities on MidCap Financial and Adtalem Global 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 Adtalem Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of MidCap Financial and Adtalem Global.
Diversification Opportunities for MidCap Financial and Adtalem Global
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MidCap and Adtalem is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding MidCap Financial Investment and Adtalem Global Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adtalem Global Education 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 Adtalem Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adtalem Global Education has no effect on the direction of MidCap Financial i.e., MidCap Financial and Adtalem Global go up and down completely randomly.
Pair Corralation between MidCap Financial and Adtalem Global
Assuming the 90 days trading horizon MidCap Financial is expected to generate 7.41 times less return on investment than Adtalem Global. But when comparing it to its historical volatility, MidCap Financial Investment is 1.86 times less risky than Adtalem Global. It trades about 0.09 of its potential returns per unit of risk. Adtalem Global Education is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 8,450 in Adtalem Global Education on October 21, 2024 and sell it today you would earn a total of 950.00 from holding Adtalem Global Education or generate 11.24% 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. Adtalem Global Education
Performance |
| Timeline |
| MidCap Financial Inv |
| Adtalem Global Education |
MidCap Financial and Adtalem Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MidCap Financial and Adtalem Global
The main advantage of trading using opposite MidCap Financial and Adtalem Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MidCap Financial position performs unexpectedly, Adtalem Global 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 Adtalem Global will offset losses from the drop in Adtalem Global's long position.| MidCap Financial vs. Apple Inc | MidCap Financial vs. Apple Inc | MidCap Financial vs. Apple Inc | MidCap Financial vs. Apple Inc |
| Adtalem Global vs. MidCap Financial Investment | Adtalem Global vs. Apollo Investment Corp | Adtalem Global vs. EPSILON HEALTHCARE LTD | Adtalem Global vs. SEI INVESTMENTS |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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