Correlation Between Great Southern and FS Bancorp
Can any of the company-specific risk be diversified away by investing in both Great Southern and FS Bancorp 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 FS Bancorp 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 FS Bancorp, you can compare the effects of market volatilities on Great Southern and FS Bancorp 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 FS Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Southern and FS Bancorp.
Diversification Opportunities for Great Southern and FS Bancorp
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Great and FSBW is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Great Southern Bancorp and FS Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FS 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 FS Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FS Bancorp has no effect on the direction of Great Southern i.e., Great Southern and FS Bancorp go up and down completely randomly.
Pair Corralation between Great Southern and FS Bancorp
Given the investment horizon of 90 days Great Southern is expected to generate 2.17 times less return on investment than FS Bancorp. But when comparing it to its historical volatility, Great Southern Bancorp is 1.1 times less risky than FS Bancorp. It trades about 0.03 of its potential returns per unit of risk. FS Bancorp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,592 in FS Bancorp on August 25, 2024 and sell it today you would earn a total of 1,098 from holding FS Bancorp or generate 30.57% 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. FS Bancorp
Performance |
| Timeline |
| Great Southern Bancorp |
| FS Bancorp |
Great Southern and FS Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Southern and FS Bancorp
The main advantage of trading using opposite Great Southern and FS Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Southern position performs unexpectedly, FS Bancorp 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 FS Bancorp will offset losses from the drop in FS Bancorp'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 |
| FS Bancorp vs. First Community | FS Bancorp vs. Oak Valley Bancorp | FS Bancorp vs. First Financial Northwest | FS Bancorp vs. ESSA 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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