Correlation Between First Commonwealth and Great Southern
Can any of the company-specific risk be diversified away by investing in both First Commonwealth 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 Commonwealth 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 Commonwealth Financial and Great Southern Bancorp, you can compare the effects of market volatilities on First Commonwealth 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 Commonwealth with a short position of Great Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Commonwealth and Great Southern.
Diversification Opportunities for First Commonwealth and Great Southern
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and Great is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding First Commonwealth Financial 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 Commonwealth 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 Commonwealth Financial 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 Commonwealth i.e., First Commonwealth and Great Southern go up and down completely randomly.
Pair Corralation between First Commonwealth and Great Southern
Considering the 90-day investment horizon First Commonwealth Financial is expected to generate 0.99 times more return on investment than Great Southern. However, First Commonwealth Financial is 1.01 times less risky than Great Southern. It trades about 0.0 of its potential returns per unit of risk. Great Southern Bancorp is currently generating about -0.02 per unit of risk. If you would invest 1,674 in First Commonwealth Financial on November 4, 2024 and sell it today you would lose (6.00) from holding First Commonwealth Financial or give up 0.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Commonwealth Financial vs. Great Southern Bancorp
Performance |
| Timeline |
| First Commonwealth |
| Great Southern Bancorp |
First Commonwealth and Great Southern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Commonwealth and Great Southern
The main advantage of trading using opposite First Commonwealth and Great Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Commonwealth 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 Commonwealth vs. US Bancorp | First Commonwealth vs. Truist Financial Corp | First Commonwealth vs. KeyCorp | First Commonwealth vs. Citizens Financial Group, |
| Great Southern vs. US Bancorp | Great Southern vs. Truist Financial Corp | Great Southern vs. KeyCorp | Great Southern vs. Citizens Financial Group, |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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