Correlation Between ESSA Bancorp and Middlefield Banc
Can any of the company-specific risk be diversified away by investing in both ESSA Bancorp and Middlefield Banc 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 ESSA Bancorp and Middlefield Banc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESSA Bancorp and Middlefield Banc, you can compare the effects of market volatilities on ESSA Bancorp and Middlefield Banc 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 ESSA Bancorp with a short position of Middlefield Banc. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESSA Bancorp and Middlefield Banc.
Diversification Opportunities for ESSA Bancorp and Middlefield Banc
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ESSA and Middlefield is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding ESSA Bancorp and Middlefield Banc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Middlefield Banc and ESSA Bancorp 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 ESSA Bancorp are associated (or correlated) with Middlefield Banc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Middlefield Banc has no effect on the direction of ESSA Bancorp i.e., ESSA Bancorp and Middlefield Banc go up and down completely randomly.
Pair Corralation between ESSA Bancorp and Middlefield Banc
Given the investment horizon of 90 days ESSA Bancorp is expected to generate 1.44 times less return on investment than Middlefield Banc. But when comparing it to its historical volatility, ESSA Bancorp is 1.34 times less risky than Middlefield Banc. It trades about 0.13 of its potential returns per unit of risk. Middlefield Banc is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,850 in Middlefield Banc on August 31, 2024 and sell it today you would earn a total of 256.00 from holding Middlefield Banc or generate 8.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ESSA Bancorp vs. Middlefield Banc
Performance |
| Timeline |
| ESSA Bancorp |
| Middlefield Banc |
ESSA Bancorp and Middlefield Banc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESSA Bancorp and Middlefield Banc
The main advantage of trading using opposite ESSA Bancorp and Middlefield Banc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESSA Bancorp position performs unexpectedly, Middlefield Banc 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 Middlefield Banc will offset losses from the drop in Middlefield Banc's long position.| ESSA Bancorp vs. Community West Bancshares | ESSA Bancorp vs. First Northwest Bancorp | ESSA Bancorp vs. First Community | ESSA Bancorp vs. Oak Valley Bancorp |
| Middlefield Banc vs. Home Federal Bancorp | Middlefield Banc vs. First Northwest Bancorp | Middlefield Banc vs. Lake Shore Bancorp | Middlefield Banc 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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Stocks Directory Find actively traded stocks across global markets | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |