Correlation Between Marten Transport and Midland States

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

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

Diversification Opportunities for Marten Transport and Midland States

0.28

Correlation Coefficient

Marten Transport  Midland States

Modest diversification

The 3 months correlation between Marten and Midland is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Marten Transport 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 Marten Transport 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 Marten Transport 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 Marten Transport i.e., Marten Transport and Midland States go up and down completely randomly.

Pair Corralation between Marten Transport and Midland States

Given the investment horizon of 90 days Marten Transport is expected to generate 0.92 times more return on investment than Midland States. However, Marten Transport is 1.09 times less risky than Midland States. It trades about -0.35 of its potential returns per unit of risk. Midland States Bancorp is currently generating about -0.35 per unit of risk. If you would invest  1,699  in Marten Transport on September 24, 2024 and sell it today you would lose (160.00) from holding Marten Transport or give up 9.42% of portfolio value over 90 days.

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

Marten Transport  vs.  Midland States Bancorp

Marten Transport

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marten Transport has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Midland States Bancorp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Midland States Bancorp are ranked lower than 7 (%) 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.

Pair Trading with Marten Transport and Midland States

The main advantage of trading using opposite Marten Transport and Midland States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marten Transport 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 Marten Transport 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.