Correlation Between MidCap Financial and Fortescue Metals
Can any of the company-specific risk be diversified away by investing in both MidCap Financial and Fortescue Metals 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 Fortescue Metals 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 Fortescue Metals Group, you can compare the effects of market volatilities on MidCap Financial and Fortescue Metals 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 Fortescue Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of MidCap Financial and Fortescue Metals.
Diversification Opportunities for MidCap Financial and Fortescue Metals
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MidCap and Fortescue is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding MidCap Financial Investment and Fortescue Metals Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortescue Metals 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 Fortescue Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortescue Metals has no effect on the direction of MidCap Financial i.e., MidCap Financial and Fortescue Metals go up and down completely randomly.
Pair Corralation between MidCap Financial and Fortescue Metals
Assuming the 90 days trading horizon MidCap Financial Investment is expected to generate 0.63 times more return on investment than Fortescue Metals. However, MidCap Financial Investment is 1.6 times less risky than Fortescue Metals. It trades about 0.07 of its potential returns per unit of risk. Fortescue Metals Group is currently generating about 0.01 per unit of risk. If you would invest 860.00 in MidCap Financial Investment on October 14, 2024 and sell it today you would earn a total of 405.00 from holding MidCap Financial Investment or generate 47.09% 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. Fortescue Metals Group
Performance |
| Timeline |
| MidCap Financial Inv |
| Fortescue Metals |
MidCap Financial and Fortescue Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MidCap Financial and Fortescue Metals
The main advantage of trading using opposite MidCap Financial and Fortescue Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MidCap Financial position performs unexpectedly, Fortescue Metals 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 Fortescue Metals will offset losses from the drop in Fortescue Metals' long position.| MidCap Financial vs. Perseus Mining Limited | MidCap Financial vs. MTY Food Group | MidCap Financial vs. Nomad Foods | MidCap Financial vs. SENECA FOODS A |
| Fortescue Metals vs. MidCap Financial Investment | Fortescue Metals vs. JLF INVESTMENT | Fortescue Metals vs. Apollo Investment Corp | Fortescue Metals vs. Cars 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |