Correlation Between Evans Bancorp and Midland States
Can any of the company-specific risk be diversified away by investing in both Evans Bancorp 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 Evans Bancorp and Midland States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evans Bancorp and Midland States Bancorp, you can compare the effects of market volatilities on Evans Bancorp 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 Evans Bancorp with a short position of Midland States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evans Bancorp and Midland States.
Diversification Opportunities for Evans Bancorp and Midland States
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Evans and Midland is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Evans Bancorp 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 Evans 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 Evans Bancorp 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 Evans Bancorp i.e., Evans Bancorp and Midland States go up and down completely randomly.
Pair Corralation between Evans Bancorp and Midland States
Given the investment horizon of 90 days Evans Bancorp is expected to generate 1.06 times more return on investment than Midland States. However, Evans Bancorp is 1.06 times more volatile than Midland States Bancorp. It trades about 0.04 of its potential returns per unit of risk. Midland States Bancorp is currently generating about 0.03 per unit of risk. If you would invest 3,499 in Evans Bancorp on August 29, 2024 and sell it today you would earn a total of 944.00 from holding Evans Bancorp or generate 26.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evans Bancorp vs. Midland States Bancorp
Performance |
| Timeline |
| Evans Bancorp |
| Midland States Bancorp |
Evans Bancorp and Midland States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evans Bancorp and Midland States
The main advantage of trading using opposite Evans Bancorp and Midland States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evans Bancorp 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.| Evans Bancorp vs. Fifth Third Bancorp | Evans Bancorp vs. Huntington Bancshares Incorporated | Evans Bancorp vs. MT Bank |
| Midland States vs. Fifth Third Bancorp | Midland States vs. Huntington Bancshares Incorporated | Midland States vs. MT Bank |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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