Correlation Between Great Southern and Independent Bank
Can any of the company-specific risk be diversified away by investing in both Great Southern and Independent Bank 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 Independent Bank 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 Independent Bank Group, you can compare the effects of market volatilities on Great Southern and Independent Bank 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 Independent Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Southern and Independent Bank.
Diversification Opportunities for Great Southern and Independent Bank
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Great and Independent is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Great Southern Bancorp and Independent Bank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Independent Bank 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 Independent Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Independent Bank has no effect on the direction of Great Southern i.e., Great Southern and Independent Bank go up and down completely randomly.
Pair Corralation between Great Southern and Independent Bank
Given the investment horizon of 90 days Great Southern is expected to generate 1.43 times less return on investment than Independent Bank. But when comparing it to its historical volatility, Great Southern Bancorp is 1.01 times less risky than Independent Bank. It trades about 0.14 of its potential returns per unit of risk. Independent Bank Group is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 5,866 in Independent Bank Group on August 28, 2024 and sell it today you would earn a total of 865.00 from holding Independent Bank Group or generate 14.75% 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. Independent Bank Group
Performance |
| Timeline |
| Great Southern Bancorp |
| Independent Bank |
Great Southern and Independent Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Southern and Independent Bank
The main advantage of trading using opposite Great Southern and Independent Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Southern position performs unexpectedly, Independent Bank 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 Independent Bank will offset losses from the drop in Independent Bank'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 |
| Independent Bank vs. Heritage Financial | Independent Bank vs. ConnectOne Bancorp | Independent Bank vs. Home Bancorp | Independent Bank vs. National Bank 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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