Correlation Between Peapack Gladstone and First Mid
Can any of the company-specific risk be diversified away by investing in both Peapack Gladstone 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 Peapack Gladstone and First Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Peapack Gladstone Financial and First Mid Illinois, you can compare the effects of market volatilities on Peapack Gladstone 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 Peapack Gladstone with a short position of First Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peapack Gladstone and First Mid.
Diversification Opportunities for Peapack Gladstone and First Mid
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Peapack and First is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Peapack Gladstone Financial 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 Peapack Gladstone 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 Peapack Gladstone Financial 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 Peapack Gladstone i.e., Peapack Gladstone and First Mid go up and down completely randomly.
Pair Corralation between Peapack Gladstone and First Mid
Considering the 90-day investment horizon Peapack Gladstone Financial is expected to generate 1.03 times more return on investment than First Mid. However, Peapack Gladstone is 1.03 times more volatile than First Mid Illinois. It trades about 0.18 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 3,116 in Peapack Gladstone Financial on August 24, 2024 and sell it today you would earn a total of 460.00 from holding Peapack Gladstone Financial or generate 14.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Peapack Gladstone Financial vs. First Mid Illinois
Performance |
| Timeline |
| Peapack Gladstone |
| First Mid Illinois |
Peapack Gladstone and First Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Peapack Gladstone and First Mid
The main advantage of trading using opposite Peapack Gladstone and First Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peapack Gladstone 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.| Peapack Gladstone vs. Sound Financial Bancorp | Peapack Gladstone vs. Finward Bancorp | Peapack Gladstone vs. Franklin Financial Services | Peapack Gladstone vs. Community West Bancshares |
| 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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