Correlation Between Bank of Utica and Mid Southern

Can any of the company-specific risk be diversified away by investing in both Bank of Utica and Mid Southern 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 Utica and Mid Southern into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bank of Utica and Mid Southern Bancorp, you can compare the effects of market volatilities on Bank of Utica and Mid Southern 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 Utica with a short position of Mid Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Utica and Mid Southern.

Diversification Opportunities for Bank of Utica and Mid Southern

0.75

Correlation Coefficient

Bank of Utica  Mid Southern

Poor diversification

The 3 months correlation between Bank and Mid is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Utica and Mid Southern Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Southern Bancorp and Bank of Utica 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 Utica are associated (or correlated) with Mid Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Southern Bancorp has no effect on the direction of Bank of Utica i.e., Bank of Utica and Mid Southern go up and down completely randomly.

Pair Corralation between Bank of Utica and Mid Southern

If you would invest  48,800  in Bank of Utica on September 21, 2024 and sell it today you would earn a total of  5,300  from holding Bank of Utica or generate 10.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	4.55%
Values	Daily Returns

Bank of Utica  vs.  Mid Southern Bancorp

Bank of Utica

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Utica are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Bank of Utica unveiled solid returns over the last few months and may actually be approaching a breakup point.

Mid Southern Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mid Southern Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Mid Southern is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bank of Utica and Mid Southern

The main advantage of trading using opposite Bank of Utica and Mid Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Utica position performs unexpectedly, Mid Southern 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 Mid Southern will offset losses from the drop in Mid Southern's long position.

The idea behind Bank of Utica and Mid Southern Bancorp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.