Correlation Between First Mid and First Bancshares,

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

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

Diversification Opportunities for First Mid and First Bancshares,

0.95

Correlation Coefficient

First Mid  First Bancshares,

Almost no diversification

The 3 months correlation between First and First is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding First Mid Illinois and The First Bancshares, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Bancshares, and First Mid 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 First Mid Illinois are associated (or correlated) with First Bancshares,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Bancshares, has no effect on the direction of First Mid i.e., First Mid and First Bancshares, go up and down completely randomly.

Pair Corralation between First Mid and First Bancshares,

Given the investment horizon of 90 days First Mid is expected to generate 1.46 times less return on investment than First Bancshares,. But when comparing it to its historical volatility, First Mid Illinois is 1.13 times less risky than First Bancshares,. It trades about 0.1 of its potential returns per unit of risk. The First Bancshares, is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,400  in The First Bancshares, on September 18, 2024 and sell it today you would earn a total of  1,297  from holding The First Bancshares, or generate 54.04% return on investment over 90 days.

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

First Mid Illinois  vs.  The First Bancshares,

First Mid Illinois

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Mid Illinois are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental drivers, First Mid is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

First Bancshares,

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The First Bancshares, are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile primary indicators, First Bancshares, unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Mid and First Bancshares,

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

The idea behind First Mid Illinois and The First Bancshares, 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.