Correlation Between RBB Bancorp and Midland States
Can any of the company-specific risk be diversified away by investing in both RBB 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 RBB 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 RBB Bancorp and Midland States Bancorp, you can compare the effects of market volatilities on RBB 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 RBB Bancorp with a short position of Midland States. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBB Bancorp and Midland States.
Diversification Opportunities for RBB Bancorp and Midland States
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between RBB and Midland is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding RBB 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 RBB 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 RBB 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 RBB Bancorp i.e., RBB Bancorp and Midland States go up and down completely randomly.
Pair Corralation between RBB Bancorp and Midland States
Considering the 90-day investment horizon RBB Bancorp is expected to generate 0.95 times more return on investment than Midland States. However, RBB Bancorp is 1.05 times less risky than Midland States. It trades about 0.13 of its potential returns per unit of risk. Midland States Bancorp is currently generating about 0.09 per unit of risk. If you would invest 1,732 in RBB Bancorp on September 2, 2024 and sell it today you would earn a total of 654.00 from holding RBB Bancorp or generate 37.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RBB Bancorp vs. Midland States Bancorp
Performance |
| Timeline |
| RBB Bancorp |
| Midland States Bancorp |
RBB Bancorp and Midland States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RBB Bancorp and Midland States
The main advantage of trading using opposite RBB Bancorp and Midland States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBB 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.| RBB Bancorp vs. Affinity Bancshares | RBB Bancorp vs. Auburn National Bancorporation | RBB Bancorp vs. First Community | RBB Bancorp vs. LINKBANCORP |
| Midland States vs. MidWestOne Financial Group | Midland States vs. Equity Bancshares, | Midland States vs. First Mid Illinois | Midland States vs. ConnectOne Bancorp |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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