Correlation Between Middlefield Banc and Cathay General
Can any of the company-specific risk be diversified away by investing in both Middlefield Banc and Cathay General 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 Middlefield Banc and Cathay General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Middlefield Banc and Cathay General Bancorp, you can compare the effects of market volatilities on Middlefield Banc and Cathay General 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 Middlefield Banc with a short position of Cathay General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Middlefield Banc and Cathay General.
Diversification Opportunities for Middlefield Banc and Cathay General
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Middlefield and Cathay is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Middlefield Banc and Cathay General Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay General Bancorp and Middlefield Banc 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 Middlefield Banc are associated (or correlated) with Cathay General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay General Bancorp has no effect on the direction of Middlefield Banc i.e., Middlefield Banc and Cathay General go up and down completely randomly.
Pair Corralation between Middlefield Banc and Cathay General
Given the investment horizon of 90 days Middlefield Banc is expected to under-perform the Cathay General. In addition to that, Middlefield Banc is 1.01 times more volatile than Cathay General Bancorp. It trades about -0.05 of its total potential returns per unit of risk. Cathay General Bancorp is currently generating about 0.06 per unit of volatility. If you would invest 4,510 in Cathay General Bancorp on October 22, 2024 and sell it today you would earn a total of 323.00 from holding Cathay General Bancorp or generate 7.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Middlefield Banc vs. Cathay General Bancorp
Performance |
| Timeline |
| Middlefield Banc |
| Cathay General Bancorp |
Middlefield Banc and Cathay General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Middlefield Banc and Cathay General
The main advantage of trading using opposite Middlefield Banc and Cathay General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Middlefield Banc position performs unexpectedly, Cathay General 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 Cathay General will offset losses from the drop in Cathay General's long position.| Middlefield Banc vs. Home Federal Bancorp | Middlefield Banc vs. First Northwest Bancorp | Middlefield Banc vs. Lake Shore Bancorp | Middlefield Banc vs. Community West Bancshares |
| Cathay General vs. Glacier Bancorp | Cathay General vs. Capitol Federal Financial | Cathay General vs. Byline Bancorp | Cathay General vs. First Financial Bankshares |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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