Correlation Between Prosperity Bancshares and Mid Penn
Can any of the company-specific risk be diversified away by investing in both Prosperity Bancshares and Mid Penn 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 Prosperity Bancshares and Mid Penn into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosperity Bancshares and Mid Penn Bancorp, you can compare the effects of market volatilities on Prosperity Bancshares and Mid Penn 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 Prosperity Bancshares with a short position of Mid Penn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosperity Bancshares and Mid Penn.
Diversification Opportunities for Prosperity Bancshares and Mid Penn
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Prosperity and Mid is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Prosperity Bancshares and Mid Penn Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Penn Bancorp and Prosperity Bancshares 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 Prosperity Bancshares are associated (or correlated) with Mid Penn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Penn Bancorp has no effect on the direction of Prosperity Bancshares i.e., Prosperity Bancshares and Mid Penn go up and down completely randomly.
Pair Corralation between Prosperity Bancshares and Mid Penn
Allowing for the 90-day total investment horizon Prosperity Bancshares is expected to generate 0.98 times more return on investment than Mid Penn. However, Prosperity Bancshares is 1.02 times less risky than Mid Penn. It trades about 0.12 of its potential returns per unit of risk. Mid Penn Bancorp is currently generating about 0.07 per unit of risk. If you would invest 7,275 in Prosperity Bancshares on August 23, 2024 and sell it today you would earn a total of 959.00 from holding Prosperity Bancshares or generate 13.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prosperity Bancshares vs. Mid Penn Bancorp
Performance |
| Timeline |
| Prosperity Bancshares |
| Mid Penn Bancorp |
Prosperity Bancshares and Mid Penn Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosperity Bancshares and Mid Penn
The main advantage of trading using opposite Prosperity Bancshares and Mid Penn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosperity Bancshares position performs unexpectedly, Mid Penn 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 Mid Penn will offset losses from the drop in Mid Penn's long position.| Prosperity Bancshares vs. Heartland Financial USA | Prosperity Bancshares vs. Heritage Commerce Corp | Prosperity Bancshares vs. Business First Bancshares | Prosperity Bancshares vs. German American Bancorp |
| Mid Penn vs. Affinity Bancshares | Mid Penn vs. Home Federal Bancorp | Mid Penn vs. Franklin Financial Services | Mid Penn vs. ACNB Corporation |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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