Correlation Between Midland States and First Mid
Can any of the company-specific risk be diversified away by investing in both Midland States 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 Midland States and First Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Midland States Bancorp and First Mid Illinois, you can compare the effects of market volatilities on Midland States 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 Midland States with a short position of First Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Midland States and First Mid.
Diversification Opportunities for Midland States and First Mid
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Midland and First is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Midland States Bancorp 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 Midland States 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 Midland States Bancorp 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 Midland States i.e., Midland States and First Mid go up and down completely randomly.
Pair Corralation between Midland States and First Mid
Given the investment horizon of 90 days Midland States Bancorp is expected to under-perform the First Mid. In addition to that, Midland States is 2.9 times more volatile than First Mid Illinois. It trades about -0.18 of its total potential returns per unit of risk. First Mid Illinois is currently generating about 0.17 per unit of volatility. If you would invest 3,597 in First Mid Illinois on November 3, 2024 and sell it today you would earn a total of 196.00 from holding First Mid Illinois or generate 5.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Midland States Bancorp vs. First Mid Illinois
Performance |
| Timeline |
| Midland States Bancorp |
| First Mid Illinois |
Midland States and First Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Midland States and First Mid
The main advantage of trading using opposite Midland States and First Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Midland States 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.| Midland States vs. MidWestOne Financial Group | Midland States vs. Equity Bancshares, | Midland States vs. First Mid Illinois | Midland States vs. ConnectOne Bancorp |
| First Mid vs. Finward Bancorp | First Mid vs. Great Southern Bancorp | First Mid vs. Franklin Financial Services | First Mid 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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