Correlation Between LINKBANCORP and First Mid

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

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

Diversification Opportunities for LINKBANCORP and First Mid

0.74

Correlation Coefficient

LINKBANCORP  First Mid

Poor diversification

The 3 months correlation between LINKBANCORP and First is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding LINKBANCORP and First Mid Illinois in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Mid Illinois and LINKBANCORP 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 LINKBANCORP are associated (or correlated) with First Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Mid Illinois has no effect on the direction of LINKBANCORP i.e., LINKBANCORP and First Mid go up and down completely randomly.

Pair Corralation between LINKBANCORP and First Mid

Given the investment horizon of 90 days LINKBANCORP is expected to generate 1.36 times more return on investment than First Mid. However, LINKBANCORP is 1.36 times more volatile than First Mid Illinois. It trades about -0.01 of its potential returns per unit of risk. First Mid Illinois is currently generating about -0.09 per unit of risk. If you would invest  693.00  in LINKBANCORP on January 10, 2025 and sell it today you would lose (18.00) from holding LINKBANCORP or give up 2.6% of portfolio value over 90 days.

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

LINKBANCORP  vs.  First Mid Illinois

LINKBANCORP

Risk-Adjusted Performance

Very Weak

Over the last 90 days LINKBANCORP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking signals, LINKBANCORP is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

First Mid Illinois

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Mid Illinois has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental drivers remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with LINKBANCORP and First Mid

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

The idea behind LINKBANCORP and First Mid Illinois 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.