Correlation Between Washington Federal and Midland States
Can any of the company-specific risk be diversified away by investing in both Washington Federal 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 Washington Federal and Midland States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Washington Federal and Midland States Bancorp, you can compare the effects of market volatilities on Washington Federal 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 Washington Federal with a short position of Midland States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Federal and Midland States.
Diversification Opportunities for Washington Federal and Midland States
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Washington and Midland is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Washington Federal 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 Washington Federal 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 Washington Federal 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 Washington Federal i.e., Washington Federal and Midland States go up and down completely randomly.
Pair Corralation between Washington Federal and Midland States
Given the investment horizon of 90 days Washington Federal is expected to under-perform the Midland States. In addition to that, Washington Federal is 1.71 times more volatile than Midland States Bancorp. It trades about -0.1 of its total potential returns per unit of risk. Midland States Bancorp is currently generating about -0.05 per unit of volatility. If you would invest 2,513 in Midland States Bancorp on November 8, 2024 and sell it today you would lose (38.00) from holding Midland States Bancorp or give up 1.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Washington Federal vs. Midland States Bancorp
Performance |
| Timeline |
| Washington Federal |
| Midland States Bancorp |
Washington Federal and Midland States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Federal and Midland States
The main advantage of trading using opposite Washington Federal and Midland States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Federal 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.| Washington Federal vs. Finward Bancorp | Washington Federal vs. Great Southern Bancorp | Washington Federal vs. First Mid Illinois | Washington Federal vs. Franklin Financial Services |
| Midland States vs. Texas Capital Bancshares | Midland States vs. Merchants Bancorp | Midland States vs. Wintrust Financial Corp |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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