Correlation Between MidCap Financial and HEMISPHERE EGY
Can any of the company-specific risk be diversified away by investing in both MidCap Financial and HEMISPHERE EGY 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 HEMISPHERE EGY 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 HEMISPHERE EGY, you can compare the effects of market volatilities on MidCap Financial and HEMISPHERE EGY 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 HEMISPHERE EGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of MidCap Financial and HEMISPHERE EGY.
Diversification Opportunities for MidCap Financial and HEMISPHERE EGY
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MidCap and HEMISPHERE is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding MidCap Financial Investment and HEMISPHERE EGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEMISPHERE EGY 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 HEMISPHERE EGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEMISPHERE EGY has no effect on the direction of MidCap Financial i.e., MidCap Financial and HEMISPHERE EGY go up and down completely randomly.
Pair Corralation between MidCap Financial and HEMISPHERE EGY
Assuming the 90 days trading horizon MidCap Financial Investment is expected to under-perform the HEMISPHERE EGY. But the stock apears to be less risky and, when comparing its historical volatility, MidCap Financial Investment is 1.0 times less risky than HEMISPHERE EGY. The stock trades about -0.11 of its potential returns per unit of risk. The HEMISPHERE EGY is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 124.00 in HEMISPHERE EGY on October 13, 2024 and sell it today you would earn a total of 0.00 from holding HEMISPHERE EGY or generate 0.0% 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. HEMISPHERE EGY
Performance |
| Timeline |
| MidCap Financial Inv |
| HEMISPHERE EGY |
MidCap Financial and HEMISPHERE EGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MidCap Financial and HEMISPHERE EGY
The main advantage of trading using opposite MidCap Financial and HEMISPHERE EGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MidCap Financial position performs unexpectedly, HEMISPHERE EGY 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 HEMISPHERE EGY will offset losses from the drop in HEMISPHERE EGY's long position.| MidCap Financial vs. Jacquet Metal Service | MidCap Financial vs. Digilife Technologies Limited | MidCap Financial vs. Minerals Technologies | MidCap Financial vs. BioNTech SE |
| HEMISPHERE EGY vs. MidCap Financial Investment | HEMISPHERE EGY vs. Charter Communications | HEMISPHERE EGY vs. SEI INVESTMENTS | HEMISPHERE EGY 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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