Correlation Between Middlefield Banc and Valley National
Can any of the company-specific risk be diversified away by investing in both Middlefield Banc and Valley National 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 Valley National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Middlefield Banc and Valley National Bancorp, you can compare the effects of market volatilities on Middlefield Banc and Valley National 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 Valley National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Middlefield Banc and Valley National.
Diversification Opportunities for Middlefield Banc and Valley National
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Middlefield and Valley is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Middlefield Banc and Valley National Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valley National 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 Valley National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valley National Bancorp has no effect on the direction of Middlefield Banc i.e., Middlefield Banc and Valley National go up and down completely randomly.
Pair Corralation between Middlefield Banc and Valley National
Given the investment horizon of 90 days Middlefield Banc is expected to generate 1.87 times less return on investment than Valley National. In addition to that, Middlefield Banc is 1.65 times more volatile than Valley National Bancorp. It trades about 0.01 of its total potential returns per unit of risk. Valley National Bancorp is currently generating about 0.04 per unit of volatility. If you would invest 1,816 in Valley National Bancorp on December 12, 2024 and sell it today you would earn a total of 644.00 from holding Valley National Bancorp or generate 35.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Middlefield Banc vs. Valley National Bancorp
Performance |
| Timeline |
| Middlefield Banc |
| Valley National Bancorp |
Middlefield Banc and Valley National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Middlefield Banc and Valley National
The main advantage of trading using opposite Middlefield Banc and Valley National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Middlefield Banc position performs unexpectedly, Valley National 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 Valley National will offset losses from the drop in Valley National'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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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