Correlation Between Civista Bancshares and Middlefield Banc
Can any of the company-specific risk be diversified away by investing in both Civista Bancshares 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 Civista Bancshares and Middlefield Banc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Civista Bancshares and Middlefield Banc, you can compare the effects of market volatilities on Civista Bancshares 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 Civista Bancshares with a short position of Middlefield Banc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Civista Bancshares and Middlefield Banc.
Diversification Opportunities for Civista Bancshares and Middlefield Banc
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Civista and Middlefield is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Civista Bancshares and Middlefield Banc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Middlefield Banc and Civista Bancshares 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 Civista Bancshares 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 Civista Bancshares i.e., Civista Bancshares and Middlefield Banc go up and down completely randomly.
Pair Corralation between Civista Bancshares and Middlefield Banc
Given the investment horizon of 90 days Civista Bancshares is expected to generate 0.7 times more return on investment than Middlefield Banc. However, Civista Bancshares is 1.43 times less risky than Middlefield Banc. It trades about 0.26 of its potential returns per unit of risk. Middlefield Banc is currently generating about 0.12 per unit of risk. If you would invest 2,020 in Civista Bancshares on September 5, 2024 and sell it today you would earn a total of 267.00 from holding Civista Bancshares or generate 13.22% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Civista Bancshares vs. Middlefield Banc
Performance |
Timeline |
Civista Bancshares |
Middlefield Banc |
Civista Bancshares and Middlefield Banc Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Civista Bancshares and Middlefield Banc
The main advantage of trading using opposite Civista Bancshares and Middlefield Banc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Civista Bancshares 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.Civista Bancshares vs. Home Federal Bancorp | Civista Bancshares vs. First Financial Northwest | Civista Bancshares vs. First Northwest Bancorp | Civista Bancshares vs. First Capital |
Middlefield Banc vs. Home Federal Bancorp | Middlefield Banc vs. First Northwest Bancorp | Middlefield Banc vs. Lake Shore Bancorp | Middlefield Banc 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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