Correlation Between Citizens Financial and Midland States
Can any of the company-specific risk be diversified away by investing in both Citizens Financial and Midland States 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 Citizens Financial and Midland States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citizens Financial Group and Midland States Bancorp, you can compare the effects of market volatilities on Citizens Financial and Midland States 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 Citizens Financial with a short position of Midland States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and Midland States.
Diversification Opportunities for Citizens Financial and Midland States
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Citizens and Midland is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and Midland States Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midland States Bancorp and Citizens 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 Citizens Financial Group are associated (or correlated) with Midland States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midland States Bancorp has no effect on the direction of Citizens Financial i.e., Citizens Financial and Midland States go up and down completely randomly.
Pair Corralation between Citizens Financial and Midland States
Assuming the 90 days trading horizon Citizens Financial Group is expected to under-perform the Midland States. But the preferred stock apears to be less risky and, when comparing its historical volatility, Citizens Financial Group is 3.08 times less risky than Midland States. The preferred stock trades about -0.15 of its potential returns per unit of risk. The Midland States Bancorp is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,438 in Midland States Bancorp on August 28, 2024 and sell it today you would earn a total of 280.00 from holding Midland States Bancorp or generate 11.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citizens Financial Group vs. Midland States Bancorp
Performance |
| Timeline |
| Citizens Financial |
| Midland States Bancorp |
Citizens Financial and Midland States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens Financial and Midland States
The main advantage of trading using opposite Citizens Financial and Midland States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial position performs unexpectedly, Midland States 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 Midland States will offset losses from the drop in Midland States' long position.| Citizens Financial vs. Capital One Financial | Citizens Financial vs. Capital One Financial | Citizens Financial vs. Bank of America |
| Midland States vs. MidWestOne Financial Group | Midland States vs. Equity Bancshares, | Midland States vs. First Mid Illinois | Midland States vs. ConnectOne Bancorp |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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