Correlation Between Middlefield Banc and Great Southern
Can any of the company-specific risk be diversified away by investing in both Middlefield Banc and Great Southern 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 Great Southern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Middlefield Banc and Great Southern Bancorp, you can compare the effects of market volatilities on Middlefield Banc and Great Southern 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 Great Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Middlefield Banc and Great Southern.
Diversification Opportunities for Middlefield Banc and Great Southern
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Middlefield and Great is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Middlefield Banc and Great Southern Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Southern 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 Great Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Southern Bancorp has no effect on the direction of Middlefield Banc i.e., Middlefield Banc and Great Southern go up and down completely randomly.
Pair Corralation between Middlefield Banc and Great Southern
Given the investment horizon of 90 days Middlefield Banc is expected to generate 1.27 times less return on investment than Great Southern. In addition to that, Middlefield Banc is 1.48 times more volatile than Great Southern Bancorp. It trades about 0.05 of its total potential returns per unit of risk. Great Southern Bancorp is currently generating about 0.1 per unit of volatility. If you would invest 5,856 in Great Southern Bancorp on November 9, 2024 and sell it today you would earn a total of 210.00 from holding Great Southern Bancorp or generate 3.59% 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. Great Southern Bancorp
Performance |
| Timeline |
| Middlefield Banc |
| Great Southern Bancorp |
Middlefield Banc and Great Southern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Middlefield Banc and Great Southern
The main advantage of trading using opposite Middlefield Banc and Great Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Middlefield Banc position performs unexpectedly, Great Southern 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 Great Southern will offset losses from the drop in Great Southern'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 |
| Great Southern vs. First Northwest Bancorp | Great Southern vs. Community West Bancshares | Great Southern vs. First Financial Northwest | Great Southern vs. First Capital |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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