Correlation Between Middlefield Banc and First IC
Can any of the company-specific risk be diversified away by investing in both Middlefield Banc and First IC 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 First IC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Middlefield Banc and First IC, you can compare the effects of market volatilities on Middlefield Banc and First IC 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 First IC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Middlefield Banc and First IC.
Diversification Opportunities for Middlefield Banc and First IC
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Middlefield and First is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Middlefield Banc and First IC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First IC 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 First IC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First IC has no effect on the direction of Middlefield Banc i.e., Middlefield Banc and First IC go up and down completely randomly.
Pair Corralation between Middlefield Banc and First IC
Given the investment horizon of 90 days Middlefield Banc is expected to generate 8.52 times less return on investment than First IC. But when comparing it to its historical volatility, Middlefield Banc is 1.48 times less risky than First IC. It trades about 0.03 of its potential returns per unit of risk. First IC is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 720.00 in First IC on December 2, 2024 and sell it today you would earn a total of 310.00 from holding First IC or generate 43.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 19.03% |
| Values | Daily Returns |
Middlefield Banc vs. First IC
Performance |
| Timeline |
| Middlefield Banc |
| First IC |
Middlefield Banc and First IC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Middlefield Banc and First IC
The main advantage of trading using opposite Middlefield Banc and First IC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Middlefield Banc position performs unexpectedly, First IC 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 First IC will offset losses from the drop in First IC's long position.| Middlefield Banc vs. Home Federal Bancorp | ||
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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