Correlation Between Great Southern and Bank7 Corp
Can any of the company-specific risk be diversified away by investing in both Great Southern and Bank7 Corp 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 Bank7 Corp 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 Bank7 Corp, you can compare the effects of market volatilities on Great Southern and Bank7 Corp 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 Bank7 Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Southern and Bank7 Corp.
Diversification Opportunities for Great Southern and Bank7 Corp
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Great and Bank7 is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Great Southern Bancorp and Bank7 Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank7 Corp 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 Bank7 Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank7 Corp has no effect on the direction of Great Southern i.e., Great Southern and Bank7 Corp go up and down completely randomly.
Pair Corralation between Great Southern and Bank7 Corp
Given the investment horizon of 90 days Great Southern is expected to generate 3.82 times less return on investment than Bank7 Corp. But when comparing it to its historical volatility, Great Southern Bancorp is 1.12 times less risky than Bank7 Corp. It trades about 0.02 of its potential returns per unit of risk. Bank7 Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,489 in Bank7 Corp on August 30, 2024 and sell it today you would earn a total of 2,274 from holding Bank7 Corp or generate 91.36% 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. Bank7 Corp
Performance |
| Timeline |
| Great Southern Bancorp |
| Bank7 Corp |
Great Southern and Bank7 Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Southern and Bank7 Corp
The main advantage of trading using opposite Great Southern and Bank7 Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Southern position performs unexpectedly, Bank7 Corp 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 Bank7 Corp will offset losses from the drop in Bank7 Corp'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 |
| Bank7 Corp vs. Home Federal Bancorp | Bank7 Corp vs. First Financial Northwest | Bank7 Corp vs. First Northwest Bancorp | Bank7 Corp 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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