Correlation Between Great Southern and First Commonwealth
Can any of the company-specific risk be diversified away by investing in both Great Southern and First Commonwealth 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 First Commonwealth 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 First Commonwealth Financial, you can compare the effects of market volatilities on Great Southern and First Commonwealth 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 First Commonwealth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Southern and First Commonwealth.
Diversification Opportunities for Great Southern and First Commonwealth
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Great and First is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Great Southern Bancorp and First Commonwealth Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Commonwealth 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 First Commonwealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Commonwealth has no effect on the direction of Great Southern i.e., Great Southern and First Commonwealth go up and down completely randomly.
Pair Corralation between Great Southern and First Commonwealth
Given the investment horizon of 90 days Great Southern Bancorp is expected to generate 0.96 times more return on investment than First Commonwealth. However, Great Southern Bancorp is 1.04 times less risky than First Commonwealth. It trades about 0.02 of its potential returns per unit of risk. First Commonwealth Financial is currently generating about -0.01 per unit of risk. If you would invest 5,797 in Great Southern Bancorp on October 26, 2024 and sell it today you would earn a total of 104.00 from holding Great Southern Bancorp or generate 1.79% 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. First Commonwealth Financial
Performance |
| Timeline |
| Great Southern Bancorp |
| First Commonwealth |
Great Southern and First Commonwealth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Southern and First Commonwealth
The main advantage of trading using opposite Great Southern and First Commonwealth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Southern position performs unexpectedly, First Commonwealth 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 First Commonwealth will offset losses from the drop in First Commonwealth'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 |
| First Commonwealth vs. Great Southern Bancorp | First Commonwealth vs. Heritage Financial | First Commonwealth vs. Finward Bancorp | First Commonwealth vs. QCR Holdings |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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