Correlation Between Washington Trust and First Mid
Can any of the company-specific risk be diversified away by investing in both Washington Trust 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 Washington Trust and First Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Washington Trust Bancorp and First Mid Illinois, you can compare the effects of market volatilities on Washington Trust 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 Washington Trust with a short position of First Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Trust and First Mid.
Diversification Opportunities for Washington Trust and First Mid
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Washington and First is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Washington Trust Bancorp 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 Washington Trust 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 Trust Bancorp 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 Washington Trust i.e., Washington Trust and First Mid go up and down completely randomly.
Pair Corralation between Washington Trust and First Mid
Given the investment horizon of 90 days Washington Trust is expected to generate 1.33 times less return on investment than First Mid. In addition to that, Washington Trust is 1.09 times more volatile than First Mid Illinois. It trades about 0.09 of its total potential returns per unit of risk. First Mid Illinois is currently generating about 0.12 per unit of volatility. If you would invest 3,886 in First Mid Illinois on August 31, 2024 and sell it today you would earn a total of 332.00 from holding First Mid Illinois or generate 8.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Washington Trust Bancorp vs. First Mid Illinois
Performance |
| Timeline |
| Washington Trust Bancorp |
| First Mid Illinois |
Washington Trust and First Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Trust and First Mid
The main advantage of trading using opposite Washington Trust and First Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Trust 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.| Washington Trust vs. Univest Pennsylvania | Washington Trust vs. Waterstone Financial | Washington Trust vs. Mid Penn Bancorp | Washington Trust vs. ST Bancorp |
| 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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