Correlation Between MidCap Financial and C PARAN
Can any of the company-specific risk be diversified away by investing in both MidCap Financial and C PARAN 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 C PARAN 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 C PARAN EN, you can compare the effects of market volatilities on MidCap Financial and C PARAN 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 C PARAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of MidCap Financial and C PARAN.
Diversification Opportunities for MidCap Financial and C PARAN
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MidCap and ELP1 is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding MidCap Financial Investment and C PARAN EN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C PARAN EN 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 C PARAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C PARAN EN has no effect on the direction of MidCap Financial i.e., MidCap Financial and C PARAN go up and down completely randomly.
Pair Corralation between MidCap Financial and C PARAN
Assuming the 90 days trading horizon MidCap Financial is expected to generate 5.81 times less return on investment than C PARAN. But when comparing it to its historical volatility, MidCap Financial Investment is 1.47 times less risky than C PARAN. It trades about 0.06 of its potential returns per unit of risk. C PARAN EN is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 550.00 in C PARAN EN on November 2, 2024 and sell it today you would earn a total of 50.00 from holding C PARAN EN or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
MidCap Financial Investment vs. C PARAN EN
Performance |
| Timeline |
| MidCap Financial Inv |
| C PARAN EN |
MidCap Financial and C PARAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MidCap Financial and C PARAN
The main advantage of trading using opposite MidCap Financial and C PARAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MidCap Financial position performs unexpectedly, C PARAN 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 C PARAN will offset losses from the drop in C PARAN'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 |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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