Correlation Between Mid Penn and Community Financial

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

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

Diversification Opportunities for Mid Penn and Community Financial

0.0

Correlation Coefficient

Mid Penn  Community Financial

Pay attention - limited upside

The 3 months correlation between Mid and Community is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Mid Penn Bancorp and Community Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Financial Corp and Mid Penn 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 Mid Penn Bancorp are associated (or correlated) with Community Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Financial Corp has no effect on the direction of Mid Penn i.e., Mid Penn and Community Financial go up and down completely randomly.

Pair Corralation between Mid Penn and Community Financial

If you would invest (100.00) in Community Financial Corp on April 30, 2025 and sell it today you would earn a total of  100.00  from holding Community Financial Corp or generate -100.0% return on investment over 90 days.

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

Mid Penn Bancorp  vs.  Community Financial Corp

Mid Penn Bancorp

Risk-Adjusted Performance

Very Weak

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

Community Financial Corp

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Mid Penn and Community Financial

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

The idea behind Mid Penn Bancorp and Community Financial Corp 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.