Correlation Between Civista Bancshares and MidWestOne Financial

Can any of the company-specific risk be diversified away by investing in both Civista Bancshares 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 Civista Bancshares and MidWestOne Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Civista Bancshares and MidWestOne Financial Group, you can compare the effects of market volatilities on Civista Bancshares 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 Civista Bancshares with a short position of MidWestOne Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Civista Bancshares and MidWestOne Financial.

Diversification Opportunities for Civista Bancshares and MidWestOne Financial

0.9

Correlation Coefficient

Civista Bancshares  MidWestOne Financial

Almost no diversification

The 3 months correlation between Civista and MidWestOne is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Civista Bancshares and MidWestOne Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MidWestOne Financial 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 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 Civista Bancshares i.e., Civista Bancshares and MidWestOne Financial go up and down completely randomly.

Pair Corralation between Civista Bancshares and MidWestOne Financial

Given the investment horizon of 90 days Civista Bancshares is expected to generate 0.93 times more return on investment than MidWestOne Financial. However, Civista Bancshares is 1.08 times less risky than MidWestOne Financial. It trades about 0.01 of its potential returns per unit of risk. MidWestOne Financial Group is currently generating about 0.01 per unit of risk. If you would invest  2,095  in Civista Bancshares on October 4, 2024 and sell it today you would lose (56.00) from holding Civista Bancshares or give up 2.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Civista Bancshares  vs.  MidWestOne Financial Group

Civista Bancshares

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Civista Bancshares are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Civista Bancshares sustained solid returns over the last few months and may actually be approaching a breakup point.

MidWestOne Financial

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MidWestOne Financial Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting technical and fundamental indicators, MidWestOne Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Civista Bancshares and MidWestOne Financial

The main advantage of trading using opposite Civista Bancshares and MidWestOne Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Civista Bancshares 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.

The idea behind Civista Bancshares and MidWestOne Financial Group 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.

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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.