Correlation Between Mercantile Bank and Mid Penn

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

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

Diversification Opportunities for Mercantile Bank and Mid Penn

0.0

Correlation Coefficient

Mercantile Bank  Mid Penn

Pay attention - limited upside

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

Pair Corralation between Mercantile Bank and Mid Penn

If you would invest  0.00  in Mid Penn Bancorp on January 29, 2024 and sell it today you would earn a total of  0.00  from holding Mid Penn Bancorp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Mercantile Bank  vs.  Mid Penn Bancorp

Mercantile Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mercantile Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Mercantile Bank is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Mid Penn Bancorp

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Mercantile Bank and Mid Penn

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

The idea behind Mercantile Bank and Mid Penn Bancorp 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.