Correlation Between Financial and Middlefield Healthcare

Can any of the company-specific risk be diversified away by investing in both Financial and Middlefield Healthcare 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 Financial and Middlefield Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Financial 15 Split and Middlefield Healthcare Life, you can compare the effects of market volatilities on Financial and Middlefield Healthcare 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 Financial with a short position of Middlefield Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial and Middlefield Healthcare.

Diversification Opportunities for Financial and Middlefield Healthcare

-0.54

Correlation Coefficient

Financial  Middlefield Healthcare

Excellent diversification

The 3 months correlation between Financial and Middlefield is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Financial 15 Split and Middlefield Healthcare Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Middlefield Healthcare and 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 Financial 15 Split are associated (or correlated) with Middlefield Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Middlefield Healthcare has no effect on the direction of Financial i.e., Financial and Middlefield Healthcare go up and down completely randomly.

Pair Corralation between Financial and Middlefield Healthcare

Assuming the 90 days trading horizon Financial 15 Split is expected to generate 0.81 times more return on investment than Middlefield Healthcare. However, Financial 15 Split is 1.23 times less risky than Middlefield Healthcare. It trades about 0.56 of its potential returns per unit of risk. Middlefield Healthcare Life is currently generating about 0.0 per unit of risk. If you would invest  750.00  in Financial 15 Split on April 21, 2025 and sell it today you would earn a total of  242.00  from holding Financial 15 Split or generate 32.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Financial 15 Split  vs.  Middlefield Healthcare Life

Financial 15 Split

Risk-Adjusted Performance

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in Financial 15 Split are ranked lower than 43 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Financial displayed solid returns over the last few months and may actually be approaching a breakup point.

Middlefield Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Middlefield Healthcare Life has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Middlefield Healthcare is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Financial and Middlefield Healthcare

The main advantage of trading using opposite Financial and Middlefield Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial position performs unexpectedly, Middlefield Healthcare 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 Middlefield Healthcare will offset losses from the drop in Middlefield Healthcare's long position.

The idea behind Financial 15 Split and Middlefield Healthcare Life pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.