Correlation Between Great Southern and Orange County
Can any of the company-specific risk be diversified away by investing in both Great Southern and Orange County 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 Orange County 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 Orange County Bancorp, you can compare the effects of market volatilities on Great Southern and Orange County 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 Orange County. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Southern and Orange County.
Diversification Opportunities for Great Southern and Orange County
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Great and Orange is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Great Southern Bancorp and Orange County Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orange County 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 Orange County. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orange County Bancorp has no effect on the direction of Great Southern i.e., Great Southern and Orange County go up and down completely randomly.
Pair Corralation between Great Southern and Orange County
Given the investment horizon of 90 days Great Southern Bancorp is expected to generate 1.17 times more return on investment than Orange County. However, Great Southern is 1.17 times more volatile than Orange County Bancorp. It trades about 0.18 of its potential returns per unit of risk. Orange County Bancorp is currently generating about 0.2 per unit of risk. If you would invest 5,669 in Great Southern Bancorp on September 1, 2024 and sell it today you would earn a total of 738.00 from holding Great Southern Bancorp or generate 13.02% 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. Orange County Bancorp
Performance |
| Timeline |
| Great Southern Bancorp |
| Orange County Bancorp |
Great Southern and Orange County Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Southern and Orange County
The main advantage of trading using opposite Great Southern and Orange County positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Southern position performs unexpectedly, Orange County 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 Orange County will offset losses from the drop in Orange County'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 |
| Orange County vs. Southern States Bancshares | Orange County vs. US Century Bank | Orange County vs. Third Coast Bancshares | Orange County vs. Esquire Financial 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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