Correlation Between Lakeland Financial and Macatawa Bank

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

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

Diversification Opportunities for Lakeland Financial and Macatawa Bank

-0.2

Correlation Coefficient

Lakeland Financial  Macatawa Bank

Good diversification

The 3 months correlation between Lakeland and Macatawa is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Lakeland Financial and Macatawa Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macatawa Bank and Lakeland Financial 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 Lakeland Financial are associated (or correlated) with Macatawa Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macatawa Bank has no effect on the direction of Lakeland Financial i.e., Lakeland Financial and Macatawa Bank go up and down completely randomly.

Pair Corralation between Lakeland Financial and Macatawa Bank

If you would invest  6,804  in Lakeland Financial on August 31, 2024 and sell it today you would earn a total of  542.00  from holding Lakeland Financial or generate 7.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Lakeland Financial  vs.  Macatawa Bank

Lakeland Financial

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lakeland Financial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Lakeland Financial may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Macatawa Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Macatawa Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Macatawa Bank is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Lakeland Financial and Macatawa Bank

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

The idea behind Lakeland Financial and Macatawa Bank 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.