Correlation Between MidCap Financial and Carlyle
Can any of the company-specific risk be diversified away by investing in both MidCap Financial and Carlyle 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 Carlyle 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 Carlyle Group, you can compare the effects of market volatilities on MidCap Financial and Carlyle 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 Carlyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of MidCap Financial and Carlyle.
Diversification Opportunities for MidCap Financial and Carlyle
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MidCap and Carlyle is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding MidCap Financial Investment and Carlyle Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlyle Group 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 Carlyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlyle Group has no effect on the direction of MidCap Financial i.e., MidCap Financial and Carlyle go up and down completely randomly.
Pair Corralation between MidCap Financial and Carlyle
Assuming the 90 days horizon MidCap Financial is expected to generate 36.89 times less return on investment than Carlyle. But when comparing it to its historical volatility, MidCap Financial Investment is 6.11 times less risky than Carlyle. It trades about 0.02 of its potential returns per unit of risk. Carlyle Group is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 4,968 in Carlyle Group on September 1, 2024 and sell it today you would earn a total of 355.00 from holding Carlyle Group or generate 7.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
MidCap Financial Investment vs. Carlyle Group
Performance |
| Timeline |
| MidCap Financial Inv |
| Carlyle Group |
MidCap Financial and Carlyle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MidCap Financial and Carlyle
The main advantage of trading using opposite MidCap Financial and Carlyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MidCap Financial position performs unexpectedly, Carlyle 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 Carlyle will offset losses from the drop in Carlyle's long position.| MidCap Financial vs. Parker Hannifin | MidCap Financial vs. Weyco Group | MidCap Financial vs. Skechers USA | MidCap Financial vs. Olympic Steel |
| Carlyle vs. Apollo Global Management | Carlyle vs. Blackstone Group | Carlyle vs. Brookfield Asset Management | Carlyle vs. Ares Management LP |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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