Correlation Between Great Southern and MidWestOne Financial
Can any of the company-specific risk be diversified away by investing in both Great Southern and MidWestOne 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 MidWestOne 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 MidWestOne Financial Group, you can compare the effects of market volatilities on Great Southern and MidWestOne 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 MidWestOne Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Southern and MidWestOne Financial.
Diversification Opportunities for Great Southern and MidWestOne Financial
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Great and MidWestOne is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Great Southern Bancorp and MidWestOne Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MidWestOne Financial 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 MidWestOne Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MidWestOne Financial has no effect on the direction of Great Southern i.e., Great Southern and MidWestOne Financial go up and down completely randomly.
Pair Corralation between Great Southern and MidWestOne Financial
Given the investment horizon of 90 days Great Southern is expected to generate 1.43 times less return on investment than MidWestOne Financial. In addition to that, Great Southern is 1.2 times more volatile than MidWestOne Financial Group. It trades about 0.11 of its total potential returns per unit of risk. MidWestOne Financial Group is currently generating about 0.18 per unit of volatility. If you would invest 2,922 in MidWestOne Financial Group on August 24, 2024 and sell it today you would earn a total of 353.00 from holding MidWestOne Financial Group or generate 12.08% 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. MidWestOne Financial Group
Performance |
| Timeline |
| Great Southern Bancorp |
| MidWestOne Financial |
Great Southern and MidWestOne Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Southern and MidWestOne Financial
The main advantage of trading using opposite Great Southern and MidWestOne Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Southern position performs unexpectedly, MidWestOne 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 MidWestOne Financial will offset losses from the drop in MidWestOne 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 |
| MidWestOne Financial vs. Home Federal Bancorp | MidWestOne Financial vs. Lake Shore Bancorp | MidWestOne Financial vs. Community West Bancshares | MidWestOne Financial vs. First Northwest 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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