Correlation Between MidCap Financial and Singapore Airlines
Can any of the company-specific risk be diversified away by investing in both MidCap Financial and Singapore Airlines 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 Singapore Airlines 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 Singapore Airlines Limited, you can compare the effects of market volatilities on MidCap Financial and Singapore Airlines 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 Singapore Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of MidCap Financial and Singapore Airlines.
Diversification Opportunities for MidCap Financial and Singapore Airlines
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between MidCap and Singapore is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding MidCap Financial Investment and Singapore Airlines Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Airlines 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 Singapore Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Airlines has no effect on the direction of MidCap Financial i.e., MidCap Financial and Singapore Airlines go up and down completely randomly.
Pair Corralation between MidCap Financial and Singapore Airlines
Assuming the 90 days trading horizon MidCap Financial Investment is expected to under-perform the Singapore Airlines. In addition to that, MidCap Financial is 1.32 times more volatile than Singapore Airlines Limited. It trades about -0.04 of its total potential returns per unit of risk. Singapore Airlines Limited is currently generating about -0.01 per unit of volatility. If you would invest 451.00 in Singapore Airlines Limited on October 11, 2024 and sell it today you would lose (1.00) from holding Singapore Airlines Limited or give up 0.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
MidCap Financial Investment vs. Singapore Airlines Limited
Performance |
| Timeline |
| MidCap Financial Inv |
| Singapore Airlines |
MidCap Financial and Singapore Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MidCap Financial and Singapore Airlines
The main advantage of trading using opposite MidCap Financial and Singapore Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MidCap Financial position performs unexpectedly, Singapore Airlines 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 Singapore Airlines will offset losses from the drop in Singapore Airlines' long position.| MidCap Financial vs. Southwest Airlines Co | MidCap Financial vs. Singapore Airlines Limited | MidCap Financial vs. GRENKELEASING Dusseldorf | MidCap Financial vs. JAPAN AIRLINES |
| Singapore Airlines vs. JLF INVESTMENT | Singapore Airlines vs. Apollo Investment Corp | Singapore Airlines vs. SLR Investment Corp | Singapore Airlines vs. WisdomTree Investments |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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