Correlation Between Mid Penn and Affinity Bancshares
Can any of the company-specific risk be diversified away by investing in both Mid Penn and Affinity Bancshares 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 Mid Penn and Affinity Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mid Penn Bancorp and Affinity Bancshares, you can compare the effects of market volatilities on Mid Penn and Affinity Bancshares 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 Mid Penn with a short position of Affinity Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Penn and Affinity Bancshares.
Diversification Opportunities for Mid Penn and Affinity Bancshares
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mid and Affinity is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Mid Penn Bancorp and Affinity Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affinity Bancshares and Mid Penn 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 Mid Penn Bancorp are associated (or correlated) with Affinity Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affinity Bancshares has no effect on the direction of Mid Penn i.e., Mid Penn and Affinity Bancshares go up and down completely randomly.
Pair Corralation between Mid Penn and Affinity Bancshares
Considering the 90-day investment horizon Mid Penn Bancorp is expected to generate 1.41 times more return on investment than Affinity Bancshares. However, Mid Penn is 1.41 times more volatile than Affinity Bancshares. It trades about 0.22 of its potential returns per unit of risk. Affinity Bancshares is currently generating about 0.22 per unit of risk. If you would invest 2,820 in Mid Penn Bancorp on November 3, 2024 and sell it today you would earn a total of 192.00 from holding Mid Penn Bancorp or generate 6.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mid Penn Bancorp vs. Affinity Bancshares
Performance |
| Timeline |
| Mid Penn Bancorp |
| Affinity Bancshares |
Mid Penn and Affinity Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid Penn and Affinity Bancshares
The main advantage of trading using opposite Mid Penn and Affinity Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Penn position performs unexpectedly, Affinity Bancshares 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 Affinity Bancshares will offset losses from the drop in Affinity Bancshares' long position.| Mid Penn vs. Affinity Bancshares | Mid Penn vs. Home Federal Bancorp | Mid Penn vs. Franklin Financial Services | Mid Penn vs. ACNB Corporation |
| Affinity Bancshares vs. Home Federal Bancorp | Affinity Bancshares vs. Magyar Bancorp | Affinity Bancshares vs. Community West Bancshares |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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