Correlation Between Western New and MidWestOne Financial
Can any of the company-specific risk be diversified away by investing in both Western New and MidWestOne Financial 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 Western New and MidWestOne Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western New England and MidWestOne Financial Group, you can compare the effects of market volatilities on Western New and MidWestOne Financial 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 Western New with a short position of MidWestOne Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western New and MidWestOne Financial.
Diversification Opportunities for Western New and MidWestOne Financial
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Western and MidWestOne is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Western New England and MidWestOne Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MidWestOne Financial and Western New 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 Western New England are associated (or correlated) with MidWestOne Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MidWestOne Financial has no effect on the direction of Western New i.e., Western New and MidWestOne Financial go up and down completely randomly.
Pair Corralation between Western New and MidWestOne Financial
Given the investment horizon of 90 days Western New is expected to generate 1.26 times less return on investment than MidWestOne Financial. But when comparing it to its historical volatility, Western New England is 1.99 times less risky than MidWestOne Financial. It trades about 0.26 of its potential returns per unit of risk. MidWestOne Financial Group is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,986 in MidWestOne Financial Group on August 31, 2024 and sell it today you would earn a total of 303.00 from holding MidWestOne Financial Group or generate 10.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western New England vs. MidWestOne Financial Group
Performance |
| Timeline |
| Western New England |
| MidWestOne Financial |
Western New and MidWestOne Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western New and MidWestOne Financial
The main advantage of trading using opposite Western New and MidWestOne Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western New position performs unexpectedly, MidWestOne Financial 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 MidWestOne Financial will offset losses from the drop in MidWestOne Financial's long position.| Western New vs. KeyCorp | Western New vs. Comerica | Western New vs. First Horizon National | Western New vs. Western Alliance Bancorporation |
| MidWestOne Financial vs. Home Federal Bancorp | MidWestOne Financial vs. Lake Shore Bancorp | MidWestOne Financial vs. Community West Bancshares | MidWestOne Financial vs. First Northwest 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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