Correlation Between Visa and Midland States
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and Midland States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Midland States Bancorp, you can compare the effects of market volatilities on Visa 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 Visa with a short position of Midland States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Midland States.
Diversification Opportunities for Visa and Midland States
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Visa and Midland is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A 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 Visa 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 Visa Class A 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 Visa i.e., Visa and Midland States go up and down completely randomly.
Pair Corralation between Visa and Midland States
Taking into account the 90-day investment horizon Visa is expected to generate 1.17 times less return on investment than Midland States. But when comparing it to its historical volatility, Visa Class A is 2.38 times less risky than Midland States. It trades about 0.36 of its potential returns per unit of risk. Midland States Bancorp is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,438 in Midland States Bancorp on August 28, 2024 and sell it today you would earn a total of 280.00 from holding Midland States Bancorp or generate 11.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Midland States Bancorp
Performance |
| Timeline |
| Visa Class A |
| Midland States Bancorp |
Visa and Midland States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Midland States
The main advantage of trading using opposite Visa and Midland States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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