Correlation Between Universal Logistics and Midland States

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

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

Diversification Opportunities for Universal Logistics and Midland States

0.75

Correlation Coefficient

Universal Logistics  Midland States

Poor diversification

The 3 months correlation between Universal and Midland is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Universal Logistics Holdings and Midland States Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midland States Bancorp and Universal Logistics 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 Universal Logistics Holdings are associated (or correlated) with Midland States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midland States Bancorp has no effect on the direction of Universal Logistics i.e., Universal Logistics and Midland States go up and down completely randomly.

Pair Corralation between Universal Logistics and Midland States

Considering the 90-day investment horizon Universal Logistics Holdings is expected to under-perform the Midland States. In addition to that, Universal Logistics is 1.27 times more volatile than Midland States Bancorp. It trades about -0.2 of its total potential returns per unit of risk. Midland States Bancorp is currently generating about -0.16 per unit of volatility. If you would invest  2,419  in Midland States Bancorp on December 29, 2024 and sell it today you would lose (689.00) from holding Midland States Bancorp or give up 28.48% of portfolio value over 90 days.

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

Universal Logistics Holdings  vs.  Midland States Bancorp

Universal Logistics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Universal Logistics Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Midland States Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Midland States Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Universal Logistics and Midland States

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

The idea behind Universal Logistics Holdings and Midland States 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.