Correlation Between MidCap Financial and ProAssurance

Can any of the company-specific risk be diversified away by investing in both MidCap Financial and ProAssurance 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 ProAssurance 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 ProAssurance, you can compare the effects of market volatilities on MidCap Financial and ProAssurance 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 ProAssurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of MidCap Financial and ProAssurance.

Diversification Opportunities for MidCap Financial and ProAssurance

0.08

Correlation Coefficient

MidCap Financial  ProAssurance

Significant diversification

The 3 months correlation between MidCap and ProAssurance is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding MidCap Financial Investment and ProAssurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProAssurance 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 ProAssurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProAssurance has no effect on the direction of MidCap Financial i.e., MidCap Financial and ProAssurance go up and down completely randomly.

Pair Corralation between MidCap Financial and ProAssurance

Given the investment horizon of 90 days MidCap Financial Investment is expected to under-perform the ProAssurance. In addition to that, MidCap Financial is 4.52 times more volatile than ProAssurance. It trades about 0.0 of its total potential returns per unit of risk. ProAssurance is currently generating about 0.05 per unit of volatility. If you would invest  2,399  in ProAssurance on October 7, 2025 and sell it today you would earn a total of  11.00  from holding ProAssurance or generate 0.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.56%
Values	Daily Returns

MidCap Financial Investment  vs.  ProAssurance

MidCap Financial Inv

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MidCap Financial Investment are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward indicators, MidCap Financial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

ProAssurance

Risk-Adjusted Performance

Weakest

Over the last 90 days ProAssurance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ProAssurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with MidCap Financial and ProAssurance

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

The idea behind MidCap Financial Investment and ProAssurance 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 Commodity Directory module to find actively traded commodities issued by global exchanges.