Correlation Between Bank of South and Middlefield Banc
Can any of the company-specific risk be diversified away by investing in both Bank of South and Middlefield Banc 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 Bank of South and Middlefield Banc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of South and Middlefield Banc, you can compare the effects of market volatilities on Bank of South and Middlefield Banc 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 Bank of South with a short position of Middlefield Banc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of South and Middlefield Banc.
Diversification Opportunities for Bank of South and Middlefield Banc
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Middlefield is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Bank of South and Middlefield Banc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Middlefield Banc and Bank of South 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 Bank of South are associated (or correlated) with Middlefield Banc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Middlefield Banc has no effect on the direction of Bank of South i.e., Bank of South and Middlefield Banc go up and down completely randomly.
Pair Corralation between Bank of South and Middlefield Banc
If you would invest 2,606 in Middlefield Banc on September 10, 2024 and sell it today you would earn a total of 489.00 from holding Middlefield Banc or generate 18.76% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 1.54% |
Values | Daily Returns |
Bank of South vs. Middlefield Banc
Performance |
Timeline |
Bank of South |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Middlefield Banc |
Bank of South and Middlefield Banc Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank of South and Middlefield Banc
The main advantage of trading using opposite Bank of South and Middlefield Banc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of South position performs unexpectedly, Middlefield Banc 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 Middlefield Banc will offset losses from the drop in Middlefield Banc's long position.Bank of South vs. Auburn National Bancorporation | Bank of South vs. Bank of Marin | Bank of South vs. Ames National | Bank of South vs. CF Financial |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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