Correlation Between PacWest Bancorp and Midland States
Can any of the company-specific risk be diversified away by investing in both PacWest Bancorp and Midland States 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 PacWest Bancorp and Midland States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PacWest Bancorp and Midland States Bancorp, you can compare the effects of market volatilities on PacWest Bancorp and Midland States 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 PacWest Bancorp with a short position of Midland States. Check out your portfolio center. Please also check ongoing floating volatility patterns of PacWest Bancorp and Midland States.
Diversification Opportunities for PacWest Bancorp and Midland States
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between PacWest and Midland is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding PacWest Bancorp and Midland States Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midland States Bancorp and PacWest Bancorp 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 PacWest Bancorp are associated (or correlated) with Midland States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midland States Bancorp has no effect on the direction of PacWest Bancorp i.e., PacWest Bancorp and Midland States go up and down completely randomly.
Pair Corralation between PacWest Bancorp and Midland States
If you would invest 2,460 in Midland States Bancorp on August 25, 2024 and sell it today you would earn a total of 48.00 from holding Midland States Bancorp or generate 1.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 1.54% |
| Values | Daily Returns |
PacWest Bancorp vs. Midland States Bancorp
Performance |
| Timeline |
| PacWest Bancorp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Midland States Bancorp |
PacWest Bancorp and Midland States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PacWest Bancorp and Midland States
The main advantage of trading using opposite PacWest Bancorp and Midland States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PacWest Bancorp position performs unexpectedly, Midland States 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 Midland States will offset losses from the drop in Midland States' long position.| PacWest Bancorp vs. Western Alliance Bancorporation | PacWest Bancorp vs. Midland States Bancorp | PacWest Bancorp vs. Wintrust Financial Corp | PacWest Bancorp vs. Bank Ozk Preferred |
| Midland States vs. Texas Capital Bancshares | Midland States vs. Merchants Bancorp | Midland States vs. Wintrust Financial Corp |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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