Correlation Between Great Southern and Bankwell Financial
Can any of the company-specific risk be diversified away by investing in both Great Southern and Bankwell Financial 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 Bankwell Financial 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 Bankwell Financial Group, you can compare the effects of market volatilities on Great Southern and Bankwell Financial 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 Bankwell Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Southern and Bankwell Financial.
Diversification Opportunities for Great Southern and Bankwell Financial
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Great and Bankwell is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Great Southern Bancorp and Bankwell Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bankwell Financial 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 Bankwell Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bankwell Financial has no effect on the direction of Great Southern i.e., Great Southern and Bankwell Financial go up and down completely randomly.
Pair Corralation between Great Southern and Bankwell Financial
Given the investment horizon of 90 days Great Southern is expected to generate 1.26 times less return on investment than Bankwell Financial. But when comparing it to its historical volatility, Great Southern Bancorp is 1.1 times less risky than Bankwell Financial. It trades about 0.03 of its potential returns per unit of risk. Bankwell Financial Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,765 in Bankwell Financial Group on November 9, 2024 and sell it today you would earn a total of 501.00 from holding Bankwell Financial Group or generate 18.12% 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. Bankwell Financial Group
Performance |
| Timeline |
| Great Southern Bancorp |
| Bankwell Financial |
Great Southern and Bankwell Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Southern and Bankwell Financial
The main advantage of trading using opposite Great Southern and Bankwell Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Southern position performs unexpectedly, Bankwell Financial 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 Bankwell Financial will offset losses from the drop in Bankwell Financial'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 |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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