Correlation Between Provident Financial and First Mid
Can any of the company-specific risk be diversified away by investing in both Provident Financial 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 Provident Financial and First Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Provident Financial Services and First Mid Illinois, you can compare the effects of market volatilities on Provident Financial 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 Provident Financial with a short position of First Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Provident Financial and First Mid.
Diversification Opportunities for Provident Financial and First Mid
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Provident and First is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Provident Financial Services 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 Provident Financial 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 Provident Financial Services 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 Provident Financial i.e., Provident Financial and First Mid go up and down completely randomly.
Pair Corralation between Provident Financial and First Mid
Considering the 90-day investment horizon Provident Financial Services is expected to generate 0.98 times more return on investment than First Mid. However, Provident Financial Services is 1.02 times less risky than First Mid. It trades about 0.14 of its potential returns per unit of risk. First Mid Illinois is currently generating about 0.09 per unit of risk. If you would invest 1,886 in Provident Financial Services on August 24, 2024 and sell it today you would earn a total of 199.00 from holding Provident Financial Services or generate 10.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Provident Financial Services vs. First Mid Illinois
Performance |
| Timeline |
| Provident Financial |
| First Mid Illinois |
Provident Financial and First Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Provident Financial and First Mid
The main advantage of trading using opposite Provident Financial and First Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Provident Financial 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.| Provident Financial vs. First Mid Illinois | Provident Financial vs. ConnectOne Bancorp | Provident Financial vs. Finward Bancorp | Provident Financial vs. CrossFirst Bankshares |
| 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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