Correlation Between First Trust and Great Southern
Can any of the company-specific risk be diversified away by investing in both First Trust 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 Trust 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 Trust Lunt and Great Southern Bancorp, you can compare the effects of market volatilities on First Trust 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 Trust with a short position of Great Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Great Southern.
Diversification Opportunities for First Trust and Great Southern
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Great is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Lunt 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 Trust 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 Trust Lunt 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 Trust i.e., First Trust and Great Southern go up and down completely randomly.
Pair Corralation between First Trust and Great Southern
Given the investment horizon of 90 days First Trust is expected to generate 1.07 times less return on investment than Great Southern. But when comparing it to its historical volatility, First Trust Lunt is 3.94 times less risky than Great Southern. It trades about 0.63 of its potential returns per unit of risk. Great Southern Bancorp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 5,716 in Great Southern Bancorp on September 2, 2024 and sell it today you would earn a total of 691.00 from holding Great Southern Bancorp or generate 12.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Lunt vs. Great Southern Bancorp
Performance |
| Timeline |
| First Trust Lunt |
| Great Southern Bancorp |
First Trust and Great Southern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Great Southern
The main advantage of trading using opposite First Trust and Great Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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 Trust vs. FT Vest Equity | First Trust vs. Northern Lights | First Trust vs. Dimensional International High | First Trust vs. Matthews China Discovery |
| Great Southern vs. Affinity Bancshares | Great Southern vs. Auburn National Bancorporation | Great Southern vs. BayCom Corp | Great Southern vs. First Community |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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