Correlation Between Gold Road and MidCap Financial
Can any of the company-specific risk be diversified away by investing in both Gold Road 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 Gold Road and MidCap Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gold Road Resources and MidCap Financial Investment, you can compare the effects of market volatilities on Gold Road 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 Gold Road with a short position of MidCap Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Road and MidCap Financial.
Diversification Opportunities for Gold Road and MidCap Financial
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gold and MidCap is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Gold Road Resources 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 Gold Road 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 Gold Road Resources 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 Gold Road i.e., Gold Road and MidCap Financial go up and down completely randomly.
Pair Corralation between Gold Road and MidCap Financial
Assuming the 90 days horizon Gold Road Resources is expected to generate 1.7 times more return on investment than MidCap Financial. However, Gold Road is 1.7 times more volatile than MidCap Financial Investment. It trades about 0.17 of its potential returns per unit of risk. MidCap Financial Investment is currently generating about -0.1 per unit of risk. If you would invest 128.00 in Gold Road Resources on December 11, 2024 and sell it today you would earn a total of 18.00 from holding Gold Road Resources or generate 14.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Road Resources vs. MidCap Financial Investment
Performance |
| Timeline |
| Gold Road Resources |
| MidCap Financial Inv |
Gold Road and MidCap Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Road and MidCap Financial
The main advantage of trading using opposite Gold Road and MidCap Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Road 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.| Gold Road vs. PennantPark Investment | Gold Road vs. JLF INVESTMENT | Gold Road vs. AGNC INVESTMENT | Gold Road vs. MEDCAW INVESTMENTS LS 01 |
| MidCap Financial vs. LINMON MEDIA LTD | MidCap Financial vs. SINGAPORE AIRLINES | MidCap Financial vs. Atresmedia Corporacin de | MidCap Financial vs. American Airlines Group |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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