Correlation Between Great Southern and Bancolombia
Can any of the company-specific risk be diversified away by investing in both Great Southern and Bancolombia 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 Bancolombia 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 Bancolombia SA ADR, you can compare the effects of market volatilities on Great Southern and Bancolombia 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 Bancolombia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Southern and Bancolombia.
Diversification Opportunities for Great Southern and Bancolombia
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Great and Bancolombia is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Great Southern Bancorp and Bancolombia SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bancolombia SA ADR 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 Bancolombia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bancolombia SA ADR has no effect on the direction of Great Southern i.e., Great Southern and Bancolombia go up and down completely randomly.
Pair Corralation between Great Southern and Bancolombia
Given the investment horizon of 90 days Great Southern is expected to generate 1.24 times less return on investment than Bancolombia. In addition to that, Great Southern is 1.16 times more volatile than Bancolombia SA ADR. It trades about 0.05 of its total potential returns per unit of risk. Bancolombia SA ADR is currently generating about 0.07 per unit of volatility. If you would invest 2,293 in Bancolombia SA ADR on September 12, 2024 and sell it today you would earn a total of 995.00 from holding Bancolombia SA ADR or generate 43.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Southern Bancorp vs. Bancolombia SA ADR
Performance |
| Timeline |
| Great Southern Bancorp |
| Bancolombia SA ADR |
Great Southern and Bancolombia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Southern and Bancolombia
The main advantage of trading using opposite Great Southern and Bancolombia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Southern position performs unexpectedly, Bancolombia 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 Bancolombia will offset losses from the drop in Bancolombia'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 |
| Bancolombia vs. Banco De Chile | Bancolombia vs. Banco Bradesco SA | Bancolombia vs. Banco Santander Chile | Bancolombia vs. Intercorp Financial Services |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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