Correlation Between Great Southern and Amalgamated Bank
Can any of the company-specific risk be diversified away by investing in both Great Southern and Amalgamated Bank 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 Great Southern and Amalgamated Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Southern Bancorp and Amalgamated Bank, you can compare the effects of market volatilities on Great Southern and Amalgamated Bank 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 Great Southern with a short position of Amalgamated Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Southern and Amalgamated Bank.
Diversification Opportunities for Great Southern and Amalgamated Bank
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Great and Amalgamated is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Great Southern Bancorp and Amalgamated Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amalgamated Bank and Great Southern 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 Great Southern Bancorp are associated (or correlated) with Amalgamated Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amalgamated Bank has no effect on the direction of Great Southern i.e., Great Southern and Amalgamated Bank go up and down completely randomly.
Pair Corralation between Great Southern and Amalgamated Bank
Given the investment horizon of 90 days Great Southern Bancorp is expected to generate 0.95 times more return on investment than Amalgamated Bank. However, Great Southern Bancorp is 1.05 times less risky than Amalgamated Bank. It trades about 0.12 of its potential returns per unit of risk. Amalgamated Bank is currently generating about 0.09 per unit of risk. If you would invest 5,836 in Great Southern Bancorp on August 29, 2024 and sell it today you would earn a total of 487.00 from holding Great Southern Bancorp or generate 8.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Southern Bancorp vs. Amalgamated Bank
Performance |
| Timeline |
| Great Southern Bancorp |
| Amalgamated Bank |
Great Southern and Amalgamated Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Southern and Amalgamated Bank
The main advantage of trading using opposite Great Southern and Amalgamated Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Southern position performs unexpectedly, Amalgamated Bank 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 Amalgamated Bank will offset losses from the drop in Amalgamated Bank's long position.| Great Southern vs. First Northwest Bancorp | Great Southern vs. Community West Bancshares | Great Southern vs. First Financial Northwest | Great Southern vs. First Capital |
| Amalgamated Bank vs. Home Bancorp | Amalgamated Bank vs. Community West Bancshares | Amalgamated Bank vs. First Community | Amalgamated Bank vs. Great Southern Bancorp |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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