Correlation Between First IC and Middlefield Banc
Can any of the company-specific risk be diversified away by investing in both First IC 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 First IC and Middlefield Banc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First IC and Middlefield Banc, you can compare the effects of market volatilities on First IC 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 First IC with a short position of Middlefield Banc. Check out your portfolio center. Please also check ongoing floating volatility patterns of First IC and Middlefield Banc.
Diversification Opportunities for First IC and Middlefield Banc
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Middlefield is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding First IC and Middlefield Banc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Middlefield Banc and First IC 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 First IC 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 First IC i.e., First IC and Middlefield Banc go up and down completely randomly.
Pair Corralation between First IC and Middlefield Banc
Given the investment horizon of 90 days First IC is expected to under-perform the Middlefield Banc. But the pink sheet apears to be less risky and, when comparing its historical volatility, First IC is 22.11 times less risky than Middlefield Banc. The pink sheet trades about -0.13 of its potential returns per unit of risk. The Middlefield Banc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,766 in Middlefield Banc on August 29, 2024 and sell it today you would earn a total of 308.00 from holding Middlefield Banc or generate 11.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
First IC vs. Middlefield Banc
Performance |
| Timeline |
| First IC |
| Middlefield Banc |
First IC and Middlefield Banc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First IC and Middlefield Banc
The main advantage of trading using opposite First IC and Middlefield Banc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First IC 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.| First IC vs. CCFNB Bancorp | First IC vs. Glen Burnie Bancorp | First IC vs. Main Street Financial | First IC vs. Enterprise Financial Services |
| Middlefield Banc vs. Home Federal Bancorp | Middlefield Banc vs. First Northwest Bancorp | Middlefield Banc vs. First Financial Northwest | Middlefield Banc vs. First Capital |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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