Correlation Between Banc Of and First Mid
Can any of the company-specific risk be diversified away by investing in both Banc Of and First Mid 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 Banc Of and First Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banc of California and First Mid Illinois, you can compare the effects of market volatilities on Banc Of and First Mid 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 Banc Of with a short position of First Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banc Of and First Mid.
Diversification Opportunities for Banc Of and First Mid
Poor diversification
The 3 months correlation between Banc and First is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Banc of California and First Mid Illinois in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Mid Illinois and Banc Of 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 Banc of California are associated (or correlated) with First Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Mid Illinois has no effect on the direction of Banc Of i.e., Banc Of and First Mid go up and down completely randomly.
Pair Corralation between Banc Of and First Mid
Assuming the 90 days trading horizon Banc Of is expected to generate 2.27 times less return on investment than First Mid. But when comparing it to its historical volatility, Banc of California is 6.68 times less risky than First Mid. It trades about 0.36 of its potential returns per unit of risk. First Mid Illinois is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,886 in First Mid Illinois on August 31, 2024 and sell it today you would earn a total of 332.00 from holding First Mid Illinois or generate 8.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banc of California vs. First Mid Illinois
Performance |
| Timeline |
| Banc of California |
| First Mid Illinois |
Banc Of and First Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banc Of and First Mid
The main advantage of trading using opposite Banc Of and First Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banc Of position performs unexpectedly, First Mid 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 Mid will offset losses from the drop in First Mid's long position.| Banc Of vs. Mangazeya Mining | Banc Of vs. Freedom Bank of | Banc Of vs. Anheuser Busch Inbev | Banc Of vs. Westrock Coffee |
| First Mid vs. Finward Bancorp | First Mid vs. Great Southern Bancorp | First Mid vs. Franklin Financial Services | First Mid vs. Community West Bancshares |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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