Correlation Between MidCap Financial and SANLAM
Can any of the company-specific risk be diversified away by investing in both MidCap Financial and SANLAM 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 SANLAM 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 SANLAM LTD RC 01, you can compare the effects of market volatilities on MidCap Financial and SANLAM 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 SANLAM. Check out your portfolio center. Please also check ongoing floating volatility patterns of MidCap Financial and SANLAM.
Diversification Opportunities for MidCap Financial and SANLAM
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between MidCap and SANLAM is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding MidCap Financial Investment and SANLAM LTD RC 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SANLAM LTD RC 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 SANLAM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SANLAM LTD RC has no effect on the direction of MidCap Financial i.e., MidCap Financial and SANLAM go up and down completely randomly.
Pair Corralation between MidCap Financial and SANLAM
Assuming the 90 days trading horizon MidCap Financial Investment is expected to generate 0.52 times more return on investment than SANLAM. However, MidCap Financial Investment is 1.92 times less risky than SANLAM. It trades about 0.05 of its potential returns per unit of risk. SANLAM LTD RC 01 is currently generating about -0.08 per unit of risk. If you would invest 1,300 in MidCap Financial Investment on October 25, 2024 and sell it today you would earn a total of 11.00 from holding MidCap Financial Investment or generate 0.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
MidCap Financial Investment vs. SANLAM LTD RC 01
Performance |
| Timeline |
| MidCap Financial Inv |
| SANLAM LTD RC |
MidCap Financial and SANLAM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MidCap Financial and SANLAM
The main advantage of trading using opposite MidCap Financial and SANLAM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MidCap Financial position performs unexpectedly, SANLAM 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 SANLAM will offset losses from the drop in SANLAM'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 |
| SANLAM vs. REINET INVESTMENTS SCA | SANLAM vs. MidCap Financial Investment | SANLAM vs. Maple Leaf Foods | SANLAM vs. PennantPark Investment |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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