Correlation Between Ready Capital and MidCap Financial

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

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

Diversification Opportunities for Ready Capital and MidCap Financial

-0.85

Correlation Coefficient

Ready Capital  MidCap Financial

Pay attention - limited upside

The 3 months correlation between Ready and MidCap is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Ready Capital 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 Ready Capital 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 Ready Capital 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 Ready Capital i.e., Ready Capital and MidCap Financial go up and down completely randomly.

Pair Corralation between Ready Capital and MidCap Financial

Allowing for the 90-day total investment horizon Ready Capital Corp is expected to under-perform the MidCap Financial. In addition to that, Ready Capital is 8.63 times more volatile than MidCap Financial Investment. It trades about -0.1 of its total potential returns per unit of risk. MidCap Financial Investment is currently generating about 0.06 per unit of volatility. If you would invest  2,488  in MidCap Financial Investment on December 27, 2024 and sell it today you would earn a total of  37.00  from holding MidCap Financial Investment or generate 1.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	96.72%
Values	Daily Returns

Ready Capital Corp  vs.  MidCap Financial Investment

Ready Capital Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ready Capital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

MidCap Financial Inv

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MidCap Financial Investment are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, MidCap Financial is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Ready Capital and MidCap Financial

The main advantage of trading using opposite Ready Capital and MidCap Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ready Capital 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.

The idea behind Ready Capital Corp and MidCap Financial Investment 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.