Correlation Between Great Southern and Enterprise Financial
Can any of the company-specific risk be diversified away by investing in both Great Southern and Enterprise 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 Enterprise 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 Enterprise Financial Services, you can compare the effects of market volatilities on Great Southern and Enterprise 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 Enterprise Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Southern and Enterprise Financial.
Diversification Opportunities for Great Southern and Enterprise Financial
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Great and Enterprise is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Great Southern Bancorp and Enterprise Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enterprise 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 Enterprise Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enterprise Financial has no effect on the direction of Great Southern i.e., Great Southern and Enterprise Financial go up and down completely randomly.
Pair Corralation between Great Southern and Enterprise Financial
Given the investment horizon of 90 days Great Southern is expected to generate 2.04 times less return on investment than Enterprise Financial. But when comparing it to its historical volatility, Great Southern Bancorp is 1.03 times less risky than Enterprise Financial. It trades about 0.05 of its potential returns per unit of risk. Enterprise Financial Services is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,874 in Enterprise Financial Services on November 3, 2024 and sell it today you would earn a total of 2,110 from holding Enterprise Financial Services or generate 54.47% 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. Enterprise Financial Services
Performance |
| Timeline |
| Great Southern Bancorp |
| Enterprise Financial |
Great Southern and Enterprise Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Southern and Enterprise Financial
The main advantage of trading using opposite Great Southern and Enterprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Southern position performs unexpectedly, Enterprise 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 Enterprise Financial will offset losses from the drop in Enterprise 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 |
| Enterprise Financial vs. US Bancorp | Enterprise Financial vs. Truist Financial Corp | Enterprise Financial vs. Fifth Third Bancorp | Enterprise Financial vs. KeyCorp |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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