Correlation Between MidCap Financial and Philip Morris

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

By analyzing existing cross correlation between MidCap Financial Investment and Philip Morris International, you can compare the effects of market volatilities on MidCap Financial and Philip Morris 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 MidCap Financial with a short position of Philip Morris. Check out your portfolio center. Please also check ongoing floating volatility patterns of MidCap Financial and Philip Morris.

Diversification Opportunities for MidCap Financial and Philip Morris

0.51

Correlation Coefficient

MidCap Financial  Philip Morris

Very weak diversification

The 3 months correlation between MidCap and Philip is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding MidCap Financial Investment and Philip Morris International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Philip Morris Intern and MidCap 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 MidCap Financial Investment are associated (or correlated) with Philip Morris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Philip Morris Intern has no effect on the direction of MidCap Financial i.e., MidCap Financial and Philip Morris go up and down completely randomly.

Pair Corralation between MidCap Financial and Philip Morris

Assuming the 90 days trading horizon MidCap Financial Investment is expected to generate 1.05 times more return on investment than Philip Morris. However, MidCap Financial is 1.05 times more volatile than Philip Morris International. It trades about 0.13 of its potential returns per unit of risk. Philip Morris International is currently generating about 0.07 per unit of risk. If you would invest  1,001  in MidCap Financial Investment on April 23, 2025 and sell it today you would earn a total of  119.00  from holding MidCap Financial Investment or generate 11.89% return on investment over 90 days.

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

MidCap Financial Investment  vs.  Philip Morris International

MidCap Financial Inv

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MidCap Financial Investment are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, MidCap Financial may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Philip Morris Intern

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Philip Morris International are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Philip Morris is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MidCap Financial and Philip Morris

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

The idea behind MidCap Financial Investment and Philip Morris International 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.