Correlation Between MidCap Financial and AECOM
Can any of the company-specific risk be diversified away by investing in both MidCap Financial and AECOM 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 AECOM 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 AECOM, you can compare the effects of market volatilities on MidCap Financial and AECOM 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 AECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of MidCap Financial and AECOM.
Diversification Opportunities for MidCap Financial and AECOM
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MidCap and AECOM is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding MidCap Financial Investment and AECOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AECOM 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 AECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AECOM has no effect on the direction of MidCap Financial i.e., MidCap Financial and AECOM go up and down completely randomly.
Pair Corralation between MidCap Financial and AECOM
Assuming the 90 days trading horizon MidCap Financial is expected to generate 4.54 times less return on investment than AECOM. But when comparing it to its historical volatility, MidCap Financial Investment is 1.44 times less risky than AECOM. It trades about 0.05 of its potential returns per unit of risk. AECOM is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 10,274 in AECOM on October 25, 2024 and sell it today you would earn a total of 426.00 from holding AECOM or generate 4.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MidCap Financial Investment vs. AECOM
Performance |
| Timeline |
| MidCap Financial Inv |
| AECOM |
MidCap Financial and AECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MidCap Financial and AECOM
The main advantage of trading using opposite MidCap Financial and AECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MidCap Financial position performs unexpectedly, AECOM 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 AECOM will offset losses from the drop in AECOM'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 |
| AECOM vs. BE Semiconductor Industries | AECOM vs. Tower Semiconductor | AECOM vs. TRAVEL LEISURE DL 01 | AECOM vs. COLUMBIA SPORTSWEAR |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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