Correlation Between Middlefield Banc and First Internet
Can any of the company-specific risk be diversified away by investing in both Middlefield Banc and First Internet 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 Internet 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 Internet Bancorp, you can compare the effects of market volatilities on Middlefield Banc and First Internet 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 Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Middlefield Banc and First Internet.
Diversification Opportunities for Middlefield Banc and First Internet
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Middlefield and First is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Middlefield Banc and First Internet Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Internet 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 First Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Internet Bancorp has no effect on the direction of Middlefield Banc i.e., Middlefield Banc and First Internet go up and down completely randomly.
Pair Corralation between Middlefield Banc and First Internet
Given the investment horizon of 90 days Middlefield Banc is expected to under-perform the First Internet. But the stock apears to be less risky and, when comparing its historical volatility, Middlefield Banc is 1.05 times less risky than First Internet. The stock trades about -0.48 of its potential returns per unit of risk. The First Internet Bancorp is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 3,732 in First Internet Bancorp on October 25, 2024 and sell it today you would lose (205.00) from holding First Internet Bancorp or give up 5.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Middlefield Banc vs. First Internet Bancorp
Performance |
| Timeline |
| Middlefield Banc |
| First Internet Bancorp |
Middlefield Banc and First Internet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Middlefield Banc and First Internet
The main advantage of trading using opposite Middlefield Banc and First Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Middlefield Banc position performs unexpectedly, First Internet 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 Internet will offset losses from the drop in First Internet'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 |
| First Internet vs. First Capital | First Internet vs. Finward Bancorp | First Internet vs. Community West Bancshares | First Internet vs. QCR Holdings |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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