Correlation Between Midland States and Interface
Can any of the company-specific risk be diversified away by investing in both Midland States and Interface 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 Interface 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 Interface, you can compare the effects of market volatilities on Midland States and Interface 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 Interface. Check out your portfolio center. Please also check ongoing floating volatility patterns of Midland States and Interface.
Diversification Opportunities for Midland States and Interface
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Midland and Interface is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Midland States Bancorp and Interface in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interface 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 Interface. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interface has no effect on the direction of Midland States i.e., Midland States and Interface go up and down completely randomly.
Pair Corralation between Midland States and Interface
Given the investment horizon of 90 days Midland States is expected to generate 2.66 times less return on investment than Interface. But when comparing it to its historical volatility, Midland States Bancorp is 1.66 times less risky than Interface. It trades about 0.09 of its potential returns per unit of risk. Interface is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,530 in Interface on September 3, 2024 and sell it today you would earn a total of 1,125 from holding Interface or generate 73.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Midland States Bancorp vs. Interface
Performance |
| Timeline |
| Midland States Bancorp |
| Interface |
Midland States and Interface Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Midland States and Interface
The main advantage of trading using opposite Midland States and Interface positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Midland States position performs unexpectedly, Interface 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 Interface will offset losses from the drop in Interface'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 |
| Interface vs. Quanex Building Products | Interface vs. Janus International Group | Interface vs. Apogee Enterprises | Interface vs. Gibraltar Industries |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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