Correlation Between First Mid and Meta Financial
Can any of the company-specific risk be diversified away by investing in both First Mid and Meta Financial 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 Mid and Meta Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Mid Illinois and Meta Financial Group, you can compare the effects of market volatilities on First Mid and Meta Financial 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 Mid with a short position of Meta Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Mid and Meta Financial.
Diversification Opportunities for First Mid and Meta Financial
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Meta is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding First Mid Illinois and Meta Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Financial Group and First Mid 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 Mid Illinois are associated (or correlated) with Meta Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta Financial Group has no effect on the direction of First Mid i.e., First Mid and Meta Financial go up and down completely randomly.
Pair Corralation between First Mid and Meta Financial
Given the investment horizon of 90 days First Mid is expected to generate 2.1 times less return on investment than Meta Financial. But when comparing it to its historical volatility, First Mid Illinois is 1.07 times less risky than Meta Financial. It trades about 0.04 of its potential returns per unit of risk. Meta Financial Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,198 in Meta Financial Group on August 27, 2024 and sell it today you would earn a total of 4,092 from holding Meta Financial Group or generate 97.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Mid Illinois vs. Meta Financial Group
Performance |
| Timeline |
| First Mid Illinois |
| Meta Financial Group |
First Mid and Meta Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Mid and Meta Financial
The main advantage of trading using opposite First Mid and Meta Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Mid position performs unexpectedly, Meta Financial 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 Meta Financial will offset losses from the drop in Meta Financial's long position.| First Mid vs. Finward Bancorp | First Mid vs. Great Southern Bancorp | First Mid vs. Franklin Financial Services | First Mid vs. Community West Bancshares |
| Meta Financial vs. Capitol Federal Financial | Meta Financial vs. Colony Bankcorp | Meta Financial vs. First Mid Illinois | Meta Financial vs. Meridian 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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