Correlation Between First Mid and Midland States
Can any of the company-specific risk be diversified away by investing in both First Mid 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 First Mid and Midland States 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 Midland States Bancorp, you can compare the effects of market volatilities on First Mid 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 First Mid with a short position of Midland States. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Mid and Midland States.
Diversification Opportunities for First Mid and Midland States
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Midland is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding First Mid Illinois 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 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 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 First Mid i.e., First Mid and Midland States go up and down completely randomly.
Pair Corralation between First Mid and Midland States
Given the investment horizon of 90 days First Mid Illinois is expected to generate 0.34 times more return on investment than Midland States. However, First Mid Illinois is 2.9 times less risky than Midland States. It trades about 0.17 of its potential returns per unit of risk. Midland States Bancorp is currently generating about -0.18 per unit of risk. If you would invest 3,597 in First Mid Illinois on November 3, 2024 and sell it today you would earn a total of 196.00 from holding First Mid Illinois or generate 5.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
First Mid Illinois vs. Midland States Bancorp
Performance |
| Timeline |
| First Mid Illinois |
| Midland States Bancorp |
First Mid and Midland States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Mid and Midland States
The main advantage of trading using opposite First Mid and Midland States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Mid 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.| First Mid vs. Finward Bancorp | First Mid vs. Great Southern Bancorp | First Mid vs. Franklin Financial Services | First Mid vs. Community West Bancshares |
| Midland States vs. MidWestOne Financial Group | Midland States vs. Equity Bancshares, | Midland States vs. First Mid Illinois | Midland States vs. ConnectOne Bancorp |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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