Correlation Between First Capital and Great Southern
Can any of the company-specific risk be diversified away by investing in both First Capital and Great Southern 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 First Capital and Great Southern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Capital and Great Southern Bancorp, you can compare the effects of market volatilities on First Capital and Great Southern 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 First Capital with a short position of Great Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Capital and Great Southern.
Diversification Opportunities for First Capital and Great Southern
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Great is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding First Capital and Great Southern Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Southern Bancorp and First Capital 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 First Capital are associated (or correlated) with Great Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Southern Bancorp has no effect on the direction of First Capital i.e., First Capital and Great Southern go up and down completely randomly.
Pair Corralation between First Capital and Great Southern
Given the investment horizon of 90 days First Capital is expected to under-perform the Great Southern. But the stock apears to be less risky and, when comparing its historical volatility, First Capital is 2.28 times less risky than Great Southern. The stock trades about -0.28 of its potential returns per unit of risk. The Great Southern Bancorp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 5,836 in Great Southern Bancorp on August 28, 2024 and sell it today you would earn a total of 568.00 from holding Great Southern Bancorp or generate 9.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Capital vs. Great Southern Bancorp
Performance |
| Timeline |
| First Capital |
| Great Southern Bancorp |
First Capital and Great Southern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Capital and Great Southern
The main advantage of trading using opposite First Capital and Great Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Capital position performs unexpectedly, Great Southern 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 Great Southern will offset losses from the drop in Great Southern's long position.| First Capital vs. Fifth Third Bancorp | First Capital vs. Zions Bancorporation | First Capital vs. Huntington Bancshares Incorporated | First Capital vs. Comerica |
| Great Southern vs. First Northwest Bancorp | Great Southern vs. Community West Bancshares | Great Southern vs. First Financial Northwest | Great Southern vs. First Capital |
Check out your portfolio center.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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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