Correlation Between Midland States and Peoples Bancorp

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

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

Diversification Opportunities for Midland States and Peoples Bancorp

0.92

Correlation Coefficient

Midland States  Peoples Bancorp

Almost no diversification

The 3 months correlation between Midland and Peoples is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Midland States Bancorp and Peoples Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peoples Bancorp and Midland States 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 Midland States Bancorp are associated (or correlated) with Peoples Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peoples Bancorp has no effect on the direction of Midland States i.e., Midland States and Peoples Bancorp go up and down completely randomly.

Pair Corralation between Midland States and Peoples Bancorp

Given the investment horizon of 90 days Midland States is expected to generate 3.24 times less return on investment than Peoples Bancorp. In addition to that, Midland States is 1.09 times more volatile than Peoples Bancorp. It trades about 0.01 of its total potential returns per unit of risk. Peoples Bancorp is currently generating about 0.03 per unit of volatility. If you would invest  2,538  in Peoples Bancorp on October 5, 2024 and sell it today you would earn a total of  631.00  from holding Peoples Bancorp or generate 24.86% return on investment over 90 days.

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

Midland States Bancorp  vs.  Peoples Bancorp

Midland States Bancorp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Midland States Bancorp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile fundamental drivers, Midland States may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Peoples Bancorp

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Peoples Bancorp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, Peoples Bancorp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Midland States and Peoples Bancorp

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

The idea behind Midland States Bancorp and Peoples 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.