Correlation Between Univest Pennsylvania and MidWestOne Financial

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

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

Diversification Opportunities for Univest Pennsylvania and MidWestOne Financial

0.93

Correlation Coefficient

Univest Pennsylvania  MidWestOne Financial

Almost no diversification

The 3 months correlation between Univest and MidWestOne is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Univest Pennsylvania and MidWestOne Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MidWestOne Financial and Univest Pennsylvania 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 Univest Pennsylvania 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 Univest Pennsylvania i.e., Univest Pennsylvania and MidWestOne Financial go up and down completely randomly.

Pair Corralation between Univest Pennsylvania and MidWestOne Financial

Given the investment horizon of 90 days Univest Pennsylvania is expected to under-perform the MidWestOne Financial. But the stock apears to be less risky and, when comparing its historical volatility, Univest Pennsylvania is 1.04 times less risky than MidWestOne Financial. The stock trades about -0.02 of its potential returns per unit of risk. The MidWestOne Financial Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,947  in MidWestOne Financial Group on December 22, 2024 and sell it today you would earn a total of  3.00  from holding MidWestOne Financial Group or generate 0.1% return on investment over 90 days.

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

Univest Pennsylvania  vs.  MidWestOne Financial Group

Univest Pennsylvania

Risk-Adjusted Performance

Very Weak

Over the last 90 days Univest Pennsylvania has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Univest Pennsylvania is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

MidWestOne Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days MidWestOne Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, MidWestOne Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Univest Pennsylvania and MidWestOne Financial

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

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.