Correlation Between Middlefield Banc and IShares Core

Can any of the company-specific risk be diversified away by investing in both Middlefield Banc and IShares Core 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 Middlefield Banc and IShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Middlefield Banc and iShares Core 5 10, you can compare the effects of market volatilities on Middlefield Banc and IShares Core 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 Middlefield Banc with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Middlefield Banc and IShares Core.

Diversification Opportunities for Middlefield Banc and IShares Core

0.41

Correlation Coefficient

Middlefield Banc  IShares Core

Very weak diversification

The 3 months correlation between Middlefield and IShares is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Middlefield Banc and iShares Core 5 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core 5 and Middlefield Banc 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 Middlefield Banc are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core 5 has no effect on the direction of Middlefield Banc i.e., Middlefield Banc and IShares Core go up and down completely randomly.

Pair Corralation between Middlefield Banc and IShares Core

Given the investment horizon of 90 days Middlefield Banc is expected to under-perform the IShares Core. In addition to that, Middlefield Banc is 3.15 times more volatile than iShares Core 5 10. It trades about -0.17 of its total potential returns per unit of risk. iShares Core 5 10 is currently generating about -0.2 per unit of volatility. If you would invest  4,266  in iShares Core 5 10 on January 25, 2024 and sell it today you would lose (81.00) from holding iShares Core 5 10 or give up 1.9% of portfolio value over 90 days.

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

Middlefield Banc  vs.  iShares Core 5 10

Middlefield Banc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Middlefield Banc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

iShares Core 5

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Core 5 10 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, IShares Core is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Middlefield Banc and IShares Core

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

The idea behind Middlefield Banc and iShares Core 5 10 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 Transaction History module to view history of all your transactions and understand their impact on performance.