Correlation Between MidCap Financial and FARM 51
Can any of the company-specific risk be diversified away by investing in both MidCap Financial and FARM 51 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 FARM 51 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 FARM 51 GROUP, you can compare the effects of market volatilities on MidCap Financial and FARM 51 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 FARM 51. Check out your portfolio center. Please also check ongoing floating volatility patterns of MidCap Financial and FARM 51.
Diversification Opportunities for MidCap Financial and FARM 51
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MidCap and FARM is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding MidCap Financial Investment and FARM 51 GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FARM 51 GROUP 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 FARM 51. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FARM 51 GROUP has no effect on the direction of MidCap Financial i.e., MidCap Financial and FARM 51 go up and down completely randomly.
Pair Corralation between MidCap Financial and FARM 51
Assuming the 90 days trading horizon MidCap Financial Investment is expected to generate 0.42 times more return on investment than FARM 51. However, MidCap Financial Investment is 2.41 times less risky than FARM 51. It trades about 0.07 of its potential returns per unit of risk. FARM 51 GROUP is currently generating about -0.03 per unit of risk. If you would invest 888.00 in MidCap Financial Investment on October 28, 2024 and sell it today you would earn a total of 418.00 from holding MidCap Financial Investment or generate 47.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MidCap Financial Investment vs. FARM 51 GROUP
Performance |
| Timeline |
| MidCap Financial Inv |
| FARM 51 GROUP |
MidCap Financial and FARM 51 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MidCap Financial and FARM 51
The main advantage of trading using opposite MidCap Financial and FARM 51 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MidCap Financial position performs unexpectedly, FARM 51 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 FARM 51 will offset losses from the drop in FARM 51's long position.| MidCap Financial vs. Apple Inc | MidCap Financial vs. Apple Inc | MidCap Financial vs. Apple Inc | MidCap Financial vs. Apple Inc |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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