Correlation Between MidWestOne Financial and First Bancorp
Can any of the company-specific risk be diversified away by investing in both MidWestOne Financial and First Bancorp 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 Bancorp 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 Bancorp, you can compare the effects of market volatilities on MidWestOne Financial and First Bancorp 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 Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of MidWestOne Financial and First Bancorp.
Diversification Opportunities for MidWestOne Financial and First Bancorp
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MidWestOne and First is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding MidWestOne Financial Group and First Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Bancorp 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 Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Bancorp has no effect on the direction of MidWestOne Financial i.e., MidWestOne Financial and First Bancorp go up and down completely randomly.
Pair Corralation between MidWestOne Financial and First Bancorp
Given the investment horizon of 90 days MidWestOne Financial Group is expected to generate 0.69 times more return on investment than First Bancorp. However, MidWestOne Financial Group is 1.45 times less risky than First Bancorp. It trades about 0.18 of its potential returns per unit of risk. First Bancorp is currently generating about 0.1 per unit of risk. If you would invest 2,922 in MidWestOne Financial Group on August 24, 2024 and sell it today you would earn a total of 353.00 from holding MidWestOne Financial Group or generate 12.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
MidWestOne Financial Group vs. First Bancorp
Performance |
| Timeline |
| MidWestOne Financial |
| First Bancorp |
MidWestOne Financial and First Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MidWestOne Financial and First Bancorp
The main advantage of trading using opposite MidWestOne Financial and First Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MidWestOne Financial position performs unexpectedly, First Bancorp 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 Bancorp will offset losses from the drop in First Bancorp's long position.| MidWestOne Financial vs. Home Federal Bancorp | MidWestOne Financial vs. Lake Shore Bancorp | MidWestOne Financial vs. Community West Bancshares | MidWestOne Financial vs. First Northwest Bancorp |
| First Bancorp vs. Banco Bradesco SA | First Bancorp vs. Itau Unibanco Banco | First Bancorp vs. Banco Santander Brasil | First Bancorp vs. Western Alliance Bancorporation |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |