Correlation Between MidCap Financial and ITALIAN WINE
Can any of the company-specific risk be diversified away by investing in both MidCap Financial and ITALIAN WINE 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 ITALIAN WINE 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 ITALIAN WINE BRANDS, you can compare the effects of market volatilities on MidCap Financial and ITALIAN WINE 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 ITALIAN WINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of MidCap Financial and ITALIAN WINE.
Diversification Opportunities for MidCap Financial and ITALIAN WINE
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between MidCap and ITALIAN is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding MidCap Financial Investment and ITALIAN WINE BRANDS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITALIAN WINE BRANDS 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 ITALIAN WINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITALIAN WINE BRANDS has no effect on the direction of MidCap Financial i.e., MidCap Financial and ITALIAN WINE go up and down completely randomly.
Pair Corralation between MidCap Financial and ITALIAN WINE
Assuming the 90 days trading horizon MidCap Financial Investment is expected to generate 0.54 times more return on investment than ITALIAN WINE. However, MidCap Financial Investment is 1.87 times less risky than ITALIAN WINE. It trades about 0.12 of its potential returns per unit of risk. ITALIAN WINE BRANDS is currently generating about 0.03 per unit of risk. If you would invest 1,215 in MidCap Financial Investment on October 26, 2024 and sell it today you would earn a total of 99.00 from holding MidCap Financial Investment or generate 8.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MidCap Financial Investment vs. ITALIAN WINE BRANDS
Performance |
| Timeline |
| MidCap Financial Inv |
| ITALIAN WINE BRANDS |
MidCap Financial and ITALIAN WINE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MidCap Financial and ITALIAN WINE
The main advantage of trading using opposite MidCap Financial and ITALIAN WINE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MidCap Financial position performs unexpectedly, ITALIAN WINE 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 ITALIAN WINE will offset losses from the drop in ITALIAN WINE's long position.| MidCap Financial vs. BII Railway Transportation | MidCap Financial vs. Gaztransport Technigaz SA | MidCap Financial vs. COPLAND ROAD CAPITAL | MidCap Financial vs. Television Broadcasts Limited |
| ITALIAN WINE vs. Japan Tobacco | ITALIAN WINE vs. SEI INVESTMENTS | ITALIAN WINE vs. MidCap Financial Investment | ITALIAN WINE vs. British American Tobacco |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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