Correlation Between Midland States and Interface

Can any of the company-specific risk be diversified away by investing in both Midland States and Interface 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 Interface 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 Interface, you can compare the effects of market volatilities on Midland States and Interface 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 Interface. Check out your portfolio center. Please also check ongoing floating volatility patterns of Midland States and Interface.

Diversification Opportunities for Midland States and Interface

0.11

Correlation Coefficient

Midland States  Interface

Average diversification

The 3 months correlation between Midland and Interface is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Midland States Bancorp and Interface in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interface 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 Interface. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interface has no effect on the direction of Midland States i.e., Midland States and Interface go up and down completely randomly.

Pair Corralation between Midland States and Interface

Given the investment horizon of 90 days Midland States Bancorp is expected to under-perform the Interface. But the stock apears to be less risky and, when comparing its historical volatility, Midland States Bancorp is 1.72 times less risky than Interface. The stock trades about -0.02 of its potential returns per unit of risk. The Interface is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,095  in Interface on May 14, 2025 and sell it today you would earn a total of  462.00  from holding Interface or generate 22.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Midland States Bancorp  vs.  Interface

Midland States Bancorp

Risk-Adjusted Performance

Weakest

Over the last 90 days Midland States Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, Midland States is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Interface

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Interface are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting essential indicators, Interface exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Midland States and Interface

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

The idea behind Midland States Bancorp and Interface 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.