Correlation Between Middlefield Healthcare and First Trust

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

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

Diversification Opportunities for Middlefield Healthcare and First Trust

0.13

Correlation Coefficient

Middlefield Healthcare  First Trust

Average diversification

The 3 months correlation between Middlefield and First is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Middlefield Healthcare Life and First Trust NYSE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust NYSE and Middlefield Healthcare 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 Middlefield Healthcare Life are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust NYSE has no effect on the direction of Middlefield Healthcare i.e., Middlefield Healthcare and First Trust go up and down completely randomly.

Pair Corralation between Middlefield Healthcare and First Trust

Assuming the 90 days horizon Middlefield Healthcare is expected to generate 41.47 times less return on investment than First Trust. But when comparing it to its historical volatility, Middlefield Healthcare Life is 1.09 times less risky than First Trust. It trades about 0.0 of its potential returns per unit of risk. First Trust NYSE is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,731  in First Trust NYSE on April 22, 2025 and sell it today you would earn a total of  112.00  from holding First Trust NYSE or generate 4.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Middlefield Healthcare Life  vs.  First Trust NYSE

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.

First Trust NYSE

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust NYSE are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, First Trust is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Middlefield Healthcare and First Trust

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

The idea behind Middlefield Healthcare Life and First Trust NYSE 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.

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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.