Correlation Between Great Southern and Community Bank
Can any of the company-specific risk be diversified away by investing in both Great Southern and Community 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 Community 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 Community Bank System, you can compare the effects of market volatilities on Great Southern and Community 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 Community Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Southern and Community Bank.
Diversification Opportunities for Great Southern and Community Bank
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Great and Community is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Great Southern Bancorp and Community Bank System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Bank System 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 Community Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Bank System has no effect on the direction of Great Southern i.e., Great Southern and Community Bank go up and down completely randomly.
Pair Corralation between Great Southern and Community Bank
Given the investment horizon of 90 days Great Southern Bancorp is expected to generate 0.94 times more return on investment than Community Bank. However, Great Southern Bancorp is 1.06 times less risky than Community Bank. It trades about -0.09 of its potential returns per unit of risk. Community Bank System is currently generating about -0.2 per unit of risk. If you would invest 5,953 in Great Southern Bancorp on November 27, 2024 and sell it today you would lose (166.00) from holding Great Southern Bancorp or give up 2.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Southern Bancorp vs. Community Bank System
Performance |
| Timeline |
| Great Southern Bancorp |
| Community Bank System |
Great Southern and Community Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Southern and Community Bank
The main advantage of trading using opposite Great Southern and Community Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Southern position performs unexpectedly, Community 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 Community Bank will offset losses from the drop in Community 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 |
| Community Bank vs. National Bank Holdings | Community Bank vs. Byline Bancorp | Community Bank vs. Home Bancorp | Community Bank vs. Finward 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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