Correlation Between Great Southern and First Of
Can any of the company-specific risk be diversified away by investing in both Great Southern and First Of 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 Of 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 of Long, you can compare the effects of market volatilities on Great Southern and First Of 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 Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Southern and First Of.
Diversification Opportunities for Great Southern and First Of
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Great and First is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Great Southern Bancorp and First of Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First of Long 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 Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First of Long has no effect on the direction of Great Southern i.e., Great Southern and First Of go up and down completely randomly.
Pair Corralation between Great Southern and First Of
Given the investment horizon of 90 days Great Southern is expected to generate 4.79 times less return on investment than First Of. But when comparing it to its historical volatility, Great Southern Bancorp is 1.07 times less risky than First Of. It trades about 0.1 of its potential returns per unit of risk. First of Long is currently generating about 0.46 of returns per unit of risk over similar time horizon. If you would invest 1,151 in First of Long on November 9, 2024 and sell it today you would earn a total of 228.00 from holding First of Long or generate 19.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Southern Bancorp vs. First of Long
Performance |
| Timeline |
| Great Southern Bancorp |
| First of Long |
Great Southern and First Of Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Southern and First Of
The main advantage of trading using opposite Great Southern and First Of positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Southern position performs unexpectedly, First Of 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 Of will offset losses from the drop in First Of'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 Of vs. Great Southern Bancorp | First Of vs. Enterprise Bancorp | First Of vs. Home Bancorp | First Of vs. Community West 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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