Correlation Between BII Railway and MidCap Financial
Can any of the company-specific risk be diversified away by investing in both BII Railway and MidCap Financial 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 BII Railway and MidCap Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BII Railway Transportation and MidCap Financial Investment, you can compare the effects of market volatilities on BII Railway and MidCap Financial 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 BII Railway with a short position of MidCap Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of BII Railway and MidCap Financial.
Diversification Opportunities for BII Railway and MidCap Financial
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BII and MidCap is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation and MidCap Financial Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MidCap Financial Inv and BII Railway 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 BII Railway Transportation are associated (or correlated) with MidCap Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MidCap Financial Inv has no effect on the direction of BII Railway i.e., BII Railway and MidCap Financial go up and down completely randomly.
Pair Corralation between BII Railway and MidCap Financial
Assuming the 90 days horizon BII Railway Transportation is expected to generate 3.4 times more return on investment than MidCap Financial. However, BII Railway is 3.4 times more volatile than MidCap Financial Investment. It trades about 0.04 of its potential returns per unit of risk. MidCap Financial Investment is currently generating about 0.07 per unit of risk. If you would invest 2.25 in BII Railway Transportation on November 5, 2024 and sell it today you would earn a total of 0.55 from holding BII Railway Transportation or generate 24.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BII Railway Transportation vs. MidCap Financial Investment
Performance |
| Timeline |
| BII Railway Transpor |
| MidCap Financial Inv |
BII Railway and MidCap Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BII Railway and MidCap Financial
The main advantage of trading using opposite BII Railway and MidCap Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BII Railway position performs unexpectedly, MidCap Financial 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 MidCap Financial will offset losses from the drop in MidCap Financial's long position.| BII Railway vs. UNIVERSAL DISPLAY | BII Railway vs. Suntory Beverage Food | BII Railway vs. UNITED UTILITIES GR | BII Railway vs. PLAYTIKA HOLDING DL 01 |
| MidCap Financial vs. SILICON LABORATOR | MidCap Financial vs. Japan Medical Dynamic | MidCap Financial vs. TRI CHEMICAL LABORATINC | MidCap Financial vs. Eastman Chemical |
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 CEOs Directory module to screen CEOs from public companies around the world.
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