Correlation Between Great Southern and Towne Bank
Can any of the company-specific risk be diversified away by investing in both Great Southern and Towne 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 Towne 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 Towne Bank, you can compare the effects of market volatilities on Great Southern and Towne 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 Towne Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Southern and Towne Bank.
Diversification Opportunities for Great Southern and Towne Bank
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Great and Towne is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Great Southern Bancorp and Towne Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Towne 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 Towne Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Towne Bank has no effect on the direction of Great Southern i.e., Great Southern and Towne Bank go up and down completely randomly.
Pair Corralation between Great Southern and Towne Bank
Given the investment horizon of 90 days Great Southern is expected to generate 1.26 times less return on investment than Towne Bank. In addition to that, Great Southern is 1.17 times more volatile than Towne Bank. It trades about 0.07 of its total potential returns per unit of risk. Towne Bank is currently generating about 0.1 per unit of volatility. If you would invest 2,641 in Towne Bank on August 27, 2024 and sell it today you would earn a total of 972.00 from holding Towne Bank or generate 36.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Southern Bancorp vs. Towne Bank
Performance |
| Timeline |
| Great Southern Bancorp |
| Towne Bank |
Great Southern and Towne Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Southern and Towne Bank
The main advantage of trading using opposite Great Southern and Towne Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Southern position performs unexpectedly, Towne 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 Towne Bank will offset losses from the drop in Towne 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 |
| Towne Bank vs. Penns Woods Bancorp | Towne Bank vs. 1st Source | Towne Bank vs. Great Southern Bancorp | Towne Bank vs. Waterstone Financial |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |