Correlation Between First Mid and International Bancshares
Can any of the company-specific risk be diversified away by investing in both First Mid and International Bancshares 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 International Bancshares 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 International Bancshares, you can compare the effects of market volatilities on First Mid and International Bancshares 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 International Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Mid and International Bancshares.
Diversification Opportunities for First Mid and International Bancshares
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and International is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding First Mid Illinois and International Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Bancshares 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 International Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Bancshares has no effect on the direction of First Mid i.e., First Mid and International Bancshares go up and down completely randomly.
Pair Corralation between First Mid and International Bancshares
Given the investment horizon of 90 days First Mid Illinois is expected to generate 0.9 times more return on investment than International Bancshares. However, First Mid Illinois is 1.12 times less risky than International Bancshares. It trades about 0.14 of its potential returns per unit of risk. International Bancshares is currently generating about 0.11 per unit of risk. If you would invest 2,996 in First Mid Illinois on September 12, 2024 and sell it today you would earn a total of 1,145 from holding First Mid Illinois or generate 38.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Mid Illinois vs. International Bancshares
Performance |
| Timeline |
| First Mid Illinois |
| International Bancshares |
First Mid and International Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Mid and International Bancshares
The main advantage of trading using opposite First Mid and International Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Mid position performs unexpectedly, International Bancshares 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 International Bancshares will offset losses from the drop in International Bancshares' 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 |
| International Bancshares vs. JPMorgan Chase Co | International Bancshares vs. Citigroup | International Bancshares vs. Wells Fargo | International Bancshares vs. Toronto Dominion 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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