Correlation Between MidWestOne Financial and First Mid
Can any of the company-specific risk be diversified away by investing in both MidWestOne Financial and First Mid 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 MidWestOne Financial and First Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MidWestOne Financial Group and First Mid Illinois, you can compare the effects of market volatilities on MidWestOne Financial and First Mid 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 MidWestOne Financial with a short position of First Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of MidWestOne Financial and First Mid.
Diversification Opportunities for MidWestOne Financial and First Mid
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between MidWestOne and First is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding MidWestOne Financial Group and First Mid Illinois in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Mid Illinois and MidWestOne Financial 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 MidWestOne Financial Group are associated (or correlated) with First Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Mid Illinois has no effect on the direction of MidWestOne Financial i.e., MidWestOne Financial and First Mid go up and down completely randomly.
Pair Corralation between MidWestOne Financial and First Mid
Given the investment horizon of 90 days MidWestOne Financial Group is expected to generate 0.96 times more return on investment than First Mid. However, MidWestOne Financial Group is 1.04 times less risky than First Mid. It trades about 0.11 of its potential returns per unit of risk. First Mid Illinois is currently generating about 0.05 per unit of risk. If you would invest 2,826 in MidWestOne Financial Group on August 28, 2024 and sell it today you would earn a total of 449.00 from holding MidWestOne Financial Group or generate 15.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MidWestOne Financial Group vs. First Mid Illinois
Performance |
| Timeline |
| MidWestOne Financial |
| First Mid Illinois |
MidWestOne Financial and First Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MidWestOne Financial and First Mid
The main advantage of trading using opposite MidWestOne Financial and First Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MidWestOne Financial position performs unexpectedly, First Mid 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 Mid will offset losses from the drop in First Mid's long position.| MidWestOne Financial vs. Fifth Third Bancorp | MidWestOne Financial vs. Huntington Bancshares Incorporated | MidWestOne Financial vs. MT Bank |
| First Mid vs. Fifth Third Bancorp | First Mid vs. Huntington Bancshares Incorporated | First Mid vs. MT Bank |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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