Correlation Between Great Southern and Lake Shore
Can any of the company-specific risk be diversified away by investing in both Great Southern and Lake Shore 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 Lake Shore 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 Lake Shore Bancorp, you can compare the effects of market volatilities on Great Southern and Lake Shore 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 Lake Shore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Southern and Lake Shore.
Diversification Opportunities for Great Southern and Lake Shore
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Great and Lake is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Great Southern Bancorp and Lake Shore Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lake Shore 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 Lake Shore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lake Shore Bancorp has no effect on the direction of Great Southern i.e., Great Southern and Lake Shore go up and down completely randomly.
Pair Corralation between Great Southern and Lake Shore
Given the investment horizon of 90 days Great Southern Bancorp is expected to generate 2.23 times more return on investment than Lake Shore. However, Great Southern is 2.23 times more volatile than Lake Shore Bancorp. It trades about 0.14 of its potential returns per unit of risk. Lake Shore Bancorp is currently generating about 0.04 per unit of risk. If you would invest 5,836 in Great Southern Bancorp on August 28, 2024 and sell it today you would earn a total of 568.00 from holding Great Southern Bancorp or generate 9.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Great Southern Bancorp vs. Lake Shore Bancorp
Performance |
| Timeline |
| Great Southern Bancorp |
| Lake Shore Bancorp |
Great Southern and Lake Shore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Southern and Lake Shore
The main advantage of trading using opposite Great Southern and Lake Shore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Southern position performs unexpectedly, Lake Shore 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 Lake Shore will offset losses from the drop in Lake Shore'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 |
| Lake Shore vs. Home Federal Bancorp | Lake Shore vs. Magyar Bancorp | Lake Shore 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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