Correlation Between First Mid and RBB Bancorp
Can any of the company-specific risk be diversified away by investing in both First Mid and RBB Bancorp 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 RBB Bancorp 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 RBB Bancorp, you can compare the effects of market volatilities on First Mid and RBB Bancorp 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 RBB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Mid and RBB Bancorp.
Diversification Opportunities for First Mid and RBB Bancorp
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and RBB is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding First Mid Illinois and RBB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBB 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 RBB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBB Bancorp has no effect on the direction of First Mid i.e., First Mid and RBB Bancorp go up and down completely randomly.
Pair Corralation between First Mid and RBB Bancorp
Given the investment horizon of 90 days First Mid Illinois is expected to generate 0.72 times more return on investment than RBB Bancorp. However, First Mid Illinois is 1.39 times less risky than RBB Bancorp. It trades about 0.04 of its potential returns per unit of risk. RBB Bancorp is currently generating about 0.03 per unit of risk. If you would invest 3,160 in First Mid Illinois on September 2, 2024 and sell it today you would earn a total of 1,041 from holding First Mid Illinois or generate 32.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Mid Illinois vs. RBB Bancorp
Performance |
| Timeline |
| First Mid Illinois |
| RBB Bancorp |
First Mid and RBB Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Mid and RBB Bancorp
The main advantage of trading using opposite First Mid and RBB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Mid position performs unexpectedly, RBB Bancorp 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 RBB Bancorp will offset losses from the drop in RBB Bancorp'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 |
| RBB Bancorp vs. Affinity Bancshares | RBB Bancorp vs. Auburn National Bancorporation | RBB Bancorp vs. First Community | RBB Bancorp vs. LINKBANCORP |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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