Correlation Between SLR Investment and MidCap Financial
Can any of the company-specific risk be diversified away by investing in both SLR Investment 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 SLR Investment and MidCap Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SLR Investment Corp and MidCap Financial Investment, you can compare the effects of market volatilities on SLR Investment 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 SLR Investment with a short position of MidCap Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of SLR Investment and MidCap Financial.
Diversification Opportunities for SLR Investment and MidCap Financial
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SLR and MidCap is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding SLR Investment Corp 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 SLR Investment 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 SLR Investment Corp 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 SLR Investment i.e., SLR Investment and MidCap Financial go up and down completely randomly.
Pair Corralation between SLR Investment and MidCap Financial
Assuming the 90 days horizon SLR Investment Corp is expected to generate 1.04 times more return on investment than MidCap Financial. However, SLR Investment is 1.04 times more volatile than MidCap Financial Investment. It trades about 0.1 of its potential returns per unit of risk. MidCap Financial Investment is currently generating about 0.04 per unit of risk. If you would invest 1,530 in SLR Investment Corp on October 28, 2024 and sell it today you would earn a total of 62.00 from holding SLR Investment Corp or generate 4.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SLR Investment Corp vs. MidCap Financial Investment
Performance |
| Timeline |
| SLR Investment Corp |
| MidCap Financial Inv |
SLR Investment and MidCap Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SLR Investment and MidCap Financial
The main advantage of trading using opposite SLR Investment and MidCap Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SLR Investment 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.| SLR Investment vs. KOBE STEEL LTD | SLR Investment vs. Mount Gibson Iron | SLR Investment vs. RELIANCE STEEL AL | SLR Investment vs. CREO MEDICAL GRP |
| MidCap Financial vs. Apple Inc | MidCap Financial vs. Apple Inc | MidCap Financial vs. Apple Inc | MidCap Financial vs. Apple Inc |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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