Correlation Between Finward Bancorp and Middlefield Banc
Can any of the company-specific risk be diversified away by investing in both Finward Bancorp 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 Finward Bancorp and Middlefield Banc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finward Bancorp and Middlefield Banc, you can compare the effects of market volatilities on Finward Bancorp 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 Finward Bancorp with a short position of Middlefield Banc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finward Bancorp and Middlefield Banc.
Diversification Opportunities for Finward Bancorp and Middlefield Banc
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Finward and Middlefield is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Finward Bancorp and Middlefield Banc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Middlefield Banc and Finward Bancorp 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 Finward Bancorp 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 Finward Bancorp i.e., Finward Bancorp and Middlefield Banc go up and down completely randomly.
Pair Corralation between Finward Bancorp and Middlefield Banc
Given the investment horizon of 90 days Finward Bancorp is expected to generate 1.73 times less return on investment than Middlefield Banc. But when comparing it to its historical volatility, Finward Bancorp is 1.65 times less risky than Middlefield Banc. It trades about 0.12 of its potential returns per unit of risk. Middlefield Banc is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,503 in Middlefield Banc on September 6, 2024 and sell it today you would earn a total of 576.00 from holding Middlefield Banc or generate 23.01% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 98.44% |
Values | Daily Returns |
Finward Bancorp vs. Middlefield Banc
Performance |
Timeline |
Finward Bancorp |
Middlefield Banc |
Finward Bancorp and Middlefield Banc Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Finward Bancorp and Middlefield Banc
The main advantage of trading using opposite Finward Bancorp and Middlefield Banc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finward Bancorp 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.Finward Bancorp vs. Community West Bancshares | Finward Bancorp vs. First Financial Northwest | Finward Bancorp vs. Oak Valley Bancorp | Finward Bancorp vs. Home Federal Bancorp |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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