Correlation Between First Republic and Midland States

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both First Republic 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 First Republic and Midland States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Republic Bank and Midland States Bancorp, you can compare the effects of market volatilities on First Republic 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 First Republic with a short position of Midland States. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Republic and Midland States.

Diversification Opportunities for First Republic and Midland States

-0.41
  Correlation Coefficient

Very good diversification

The 3 months correlation between First and Midland is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding First Republic Bank 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 First Republic 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 Republic Bank 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 First Republic i.e., First Republic and Midland States go up and down completely randomly.

Pair Corralation between First Republic and Midland States

If you would invest  2,208  in Midland States Bancorp on September 5, 2024 and sell it today you would earn a total of  450.00  from holding Midland States Bancorp or generate 20.38% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy1.56%
ValuesDaily Returns

First Republic Bank  vs.  Midland States Bancorp

 Performance 
       Timeline  
First Republic Bank 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days First Republic Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, First Republic is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.
Midland States Bancorp 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Midland States Bancorp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile fundamental drivers, Midland States demonstrated solid returns over the last few months and may actually be approaching a breakup point.

First Republic and Midland States Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with First Republic and Midland States

The main advantage of trading using opposite First Republic and Midland States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Republic 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 First Republic Bank 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.
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

Other Complementary Tools

My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like
Fundamental Analysis
View fundamental data based on most recent published financial statements
Odds Of Bankruptcy
Get analysis of equity chance of financial distress in the next 2 years
Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
Sectors
List of equity sectors categorizing publicly traded companies based on their primary business activities