Correlation Between CHAMPION IRON and MidCap Financial
Can any of the company-specific risk be diversified away by investing in both CHAMPION IRON 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 CHAMPION IRON and MidCap Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHAMPION IRON and MidCap Financial Investment, you can compare the effects of market volatilities on CHAMPION IRON 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 CHAMPION IRON with a short position of MidCap Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHAMPION IRON and MidCap Financial.
Diversification Opportunities for CHAMPION IRON and MidCap Financial
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between CHAMPION and MidCap is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding CHAMPION IRON 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 CHAMPION IRON 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 CHAMPION IRON 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 CHAMPION IRON i.e., CHAMPION IRON and MidCap Financial go up and down completely randomly.
Pair Corralation between CHAMPION IRON and MidCap Financial
Assuming the 90 days trading horizon CHAMPION IRON is expected to under-perform the MidCap Financial. In addition to that, CHAMPION IRON is 2.6 times more volatile than MidCap Financial Investment. It trades about -0.12 of its total potential returns per unit of risk. MidCap Financial Investment is currently generating about 0.1 per unit of volatility. If you would invest 1,311 in MidCap Financial Investment on November 7, 2024 and sell it today you would earn a total of 29.00 from holding MidCap Financial Investment or generate 2.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHAMPION IRON vs. MidCap Financial Investment
Performance |
| Timeline |
| CHAMPION IRON |
| MidCap Financial Inv |
CHAMPION IRON and MidCap Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHAMPION IRON and MidCap Financial
The main advantage of trading using opposite CHAMPION IRON and MidCap Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHAMPION IRON 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.| CHAMPION IRON vs. Tyson Foods | CHAMPION IRON vs. CAL MAINE FOODS | CHAMPION IRON vs. Mobilezone Holding AG | CHAMPION IRON vs. UNITED UTILITIES GR |
| MidCap Financial vs. Major Drilling Group | MidCap Financial vs. BORR DRILLING NEW | MidCap Financial vs. Luckin Coffee | MidCap Financial vs. VARIOUS EATERIES LS |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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