Correlation Between Midland States and MidWestOne Financial
Can any of the company-specific risk be diversified away by investing in both Midland States and MidWestOne Financial 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 MidWestOne Financial 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 MidWestOne Financial Group, you can compare the effects of market volatilities on Midland States and MidWestOne Financial 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 MidWestOne Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Midland States and MidWestOne Financial.
Diversification Opportunities for Midland States and MidWestOne Financial
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Midland and MidWestOne is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Midland States Bancorp and MidWestOne Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MidWestOne Financial 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 MidWestOne Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MidWestOne Financial has no effect on the direction of Midland States i.e., Midland States and MidWestOne Financial go up and down completely randomly.
Pair Corralation between Midland States and MidWestOne Financial
Given the investment horizon of 90 days Midland States Bancorp is expected to under-perform the MidWestOne Financial. In addition to that, Midland States is 3.26 times more volatile than MidWestOne Financial Group. It trades about -0.18 of its total potential returns per unit of risk. MidWestOne Financial Group is currently generating about 0.34 per unit of volatility. If you would invest 2,850 in MidWestOne Financial Group on November 3, 2024 and sell it today you would earn a total of 313.00 from holding MidWestOne Financial Group or generate 10.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Midland States Bancorp vs. MidWestOne Financial Group
Performance |
| Timeline |
| Midland States Bancorp |
| MidWestOne Financial |
Midland States and MidWestOne Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Midland States and MidWestOne Financial
The main advantage of trading using opposite Midland States and MidWestOne Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Midland States position performs unexpectedly, MidWestOne Financial 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 MidWestOne Financial will offset losses from the drop in MidWestOne Financial'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 |
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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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