Correlation Between Midland States and Marten Transport

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

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

Diversification Opportunities for Midland States and Marten Transport

0.26

Correlation Coefficient

Midland States  Marten Transport

Modest diversification

The 3 months correlation between Midland and Marten is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Midland States Bancorp and Marten Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marten Transport and Midland States 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 Midland States Bancorp are associated (or correlated) with Marten Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marten Transport has no effect on the direction of Midland States i.e., Midland States and Marten Transport go up and down completely randomly.

Pair Corralation between Midland States and Marten Transport

Given the investment horizon of 90 days Midland States Bancorp is expected to generate 1.21 times more return on investment than Marten Transport. However, Midland States is 1.21 times more volatile than Marten Transport. It trades about 0.08 of its potential returns per unit of risk. Marten Transport is currently generating about -0.04 per unit of risk. If you would invest  2,229  in Midland States Bancorp on September 20, 2024 and sell it today you would earn a total of  228.00  from holding Midland States Bancorp or generate 10.23% return on investment over 90 days.

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

Midland States Bancorp  vs.  Marten Transport

Midland States Bancorp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Midland States Bancorp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile fundamental drivers, Midland States may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 very healthy basic indicators, Marten Transport is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Midland States and Marten Transport

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

The idea behind Midland States Bancorp and Marten Transport 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.