Correlation Between Great Southern and FB Financial
Can any of the company-specific risk be diversified away by investing in both Great Southern and FB 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 FB 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 FB Financial Corp, you can compare the effects of market volatilities on Great Southern and FB 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 FB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Southern and FB Financial.
Diversification Opportunities for Great Southern and FB Financial
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Great and FBK is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Great Southern Bancorp and FB Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FB Financial 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 FB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FB Financial Corp has no effect on the direction of Great Southern i.e., Great Southern and FB Financial go up and down completely randomly.
Pair Corralation between Great Southern and FB Financial
Given the investment horizon of 90 days Great Southern is expected to generate 1.6 times less return on investment than FB Financial. But when comparing it to its historical volatility, Great Southern Bancorp is 1.08 times less risky than FB Financial. It trades about 0.12 of its potential returns per unit of risk. FB Financial Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 4,567 in FB Financial Corp on August 26, 2024 and sell it today you would earn a total of 1,092 from holding FB Financial Corp or generate 23.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Southern Bancorp vs. FB Financial Corp
Performance |
| Timeline |
| Great Southern Bancorp |
| FB Financial Corp |
Great Southern and FB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Southern and FB Financial
The main advantage of trading using opposite Great Southern and FB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Southern position performs unexpectedly, FB 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 FB Financial will offset losses from the drop in FB 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 |
| FB Financial vs. Home Bancorp | FB Financial vs. First Business Financial | FB Financial vs. LINKBANCORP | FB Financial vs. Great Southern 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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