Correlation Between Capitol Federal and First Mid
Can any of the company-specific risk be diversified away by investing in both Capitol Federal 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 Capitol Federal and First Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capitol Federal Financial and First Mid Illinois, you can compare the effects of market volatilities on Capitol Federal 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 Capitol Federal with a short position of First Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capitol Federal and First Mid.
Diversification Opportunities for Capitol Federal and First Mid
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Capitol and First is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Capitol Federal Financial 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 Capitol Federal 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 Capitol Federal Financial 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 Capitol Federal i.e., Capitol Federal and First Mid go up and down completely randomly.
Pair Corralation between Capitol Federal and First Mid
Given the investment horizon of 90 days Capitol Federal Financial is expected to under-perform the First Mid. But the stock apears to be less risky and, when comparing its historical volatility, Capitol Federal Financial is 1.29 times less risky than First Mid. The stock trades about -0.16 of its potential returns per unit of risk. The First Mid Illinois is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 3,750 in First Mid Illinois on October 24, 2024 and sell it today you would lose (80.00) from holding First Mid Illinois or give up 2.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capitol Federal Financial vs. First Mid Illinois
Performance |
| Timeline |
| Capitol Federal Financial |
| First Mid Illinois |
Capitol Federal and First Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capitol Federal and First Mid
The main advantage of trading using opposite Capitol Federal and First Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capitol Federal 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.| Capitol Federal vs. Independent Bank | Capitol Federal vs. BankFinancial | Capitol Federal vs. Business First Bancshares | Capitol Federal vs. First Bancorp |
| First Mid vs. Finward Bancorp | First Mid vs. Northfield Bancorp | First Mid vs. Community West Bancshares | First Mid vs. First Community |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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