Correlation Between Singapore Airlines and MidCap Financial
Can any of the company-specific risk be diversified away by investing in both Singapore Airlines 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 Singapore Airlines and MidCap Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Singapore Airlines Limited and MidCap Financial Investment, you can compare the effects of market volatilities on Singapore Airlines 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 Singapore Airlines with a short position of MidCap Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Airlines and MidCap Financial.
Diversification Opportunities for Singapore Airlines and MidCap Financial
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Singapore and MidCap is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Airlines Limited 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 Singapore Airlines 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 Singapore Airlines Limited 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 Singapore Airlines i.e., Singapore Airlines and MidCap Financial go up and down completely randomly.
Pair Corralation between Singapore Airlines and MidCap Financial
Assuming the 90 days trading horizon Singapore Airlines is expected to generate 1.45 times less return on investment than MidCap Financial. In addition to that, Singapore Airlines is 1.08 times more volatile than MidCap Financial Investment. It trades about 0.04 of its total potential returns per unit of risk. MidCap Financial Investment is currently generating about 0.07 per unit of volatility. If you would invest 888.00 in MidCap Financial Investment on October 26, 2024 and sell it today you would earn a total of 418.00 from holding MidCap Financial Investment or generate 47.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Singapore Airlines Limited vs. MidCap Financial Investment
Performance |
| Timeline |
| Singapore Airlines |
| MidCap Financial Inv |
Singapore Airlines and MidCap Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Singapore Airlines and MidCap Financial
The main advantage of trading using opposite Singapore Airlines and MidCap Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Airlines 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.| Singapore Airlines vs. Delta Air Lines | Singapore Airlines vs. Air China Limited | Singapore Airlines vs. AIR CHINA LTD | Singapore Airlines vs. RYANAIR HLDGS ADR |
| MidCap Financial vs. BII Railway Transportation | MidCap Financial vs. Gaztransport Technigaz SA | MidCap Financial vs. COPLAND ROAD CAPITAL | MidCap Financial vs. Television Broadcasts Limited |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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