Correlation Between Great Southern and First Financial
Can any of the company-specific risk be diversified away by investing in both Great Southern and First 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 First 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 First Financial Bancorp, you can compare the effects of market volatilities on Great Southern and First 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 First Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Southern and First Financial.
Diversification Opportunities for Great Southern and First Financial
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Great and First is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Great Southern Bancorp and First Financial Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Financial Bancorp 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 Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Financial Bancorp has no effect on the direction of Great Southern i.e., Great Southern and First Financial go up and down completely randomly.
Pair Corralation between Great Southern and First Financial
Given the investment horizon of 90 days Great Southern is expected to generate 1.93 times less return on investment than First Financial. In addition to that, Great Southern is 1.04 times more volatile than First Financial Bancorp. It trades about 0.03 of its total potential returns per unit of risk. First Financial Bancorp is currently generating about 0.07 per unit of volatility. If you would invest 2,139 in First Financial Bancorp on November 9, 2024 and sell it today you would earn a total of 765.00 from holding First Financial Bancorp or generate 35.76% 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 Financial Bancorp
Performance |
| Timeline |
| Great Southern Bancorp |
| First Financial Bancorp |
Great Southern and First Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Southern and First Financial
The main advantage of trading using opposite Great Southern and First Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Southern position performs unexpectedly, First 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 First Financial will offset losses from the drop in First 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 |
| First Financial vs. Home Bancorp | First Financial vs. Heritage Financial | First Financial vs. First Northwest Bancorp | First Financial vs. HomeTrust Bancshares |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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