Correlation Between International Bancshares and Prosperity Bancshares
Can any of the company-specific risk be diversified away by investing in both International Bancshares and Prosperity Bancshares 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 International Bancshares and Prosperity Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Bancshares and Prosperity Bancshares, you can compare the effects of market volatilities on International Bancshares and Prosperity Bancshares 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 International Bancshares with a short position of Prosperity Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Bancshares and Prosperity Bancshares.
Diversification Opportunities for International Bancshares and Prosperity Bancshares
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between International and Prosperity is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding International Bancshares and Prosperity Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosperity Bancshares and International Bancshares 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 International Bancshares are associated (or correlated) with Prosperity Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosperity Bancshares has no effect on the direction of International Bancshares i.e., International Bancshares and Prosperity Bancshares go up and down completely randomly.
Pair Corralation between International Bancshares and Prosperity Bancshares
Given the investment horizon of 90 days International Bancshares is expected to generate 1.49 times more return on investment than Prosperity Bancshares. However, International Bancshares is 1.49 times more volatile than Prosperity Bancshares. It trades about 0.11 of its potential returns per unit of risk. Prosperity Bancshares is currently generating about 0.14 per unit of risk. If you would invest 6,181 in International Bancshares on September 4, 2024 and sell it today you would earn a total of 1,026 from holding International Bancshares or generate 16.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Bancshares vs. Prosperity Bancshares
Performance |
| Timeline |
| International Bancshares |
| Prosperity Bancshares |
International Bancshares and Prosperity Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Bancshares and Prosperity Bancshares
The main advantage of trading using opposite International Bancshares and Prosperity Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Bancshares position performs unexpectedly, Prosperity Bancshares 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 Prosperity Bancshares will offset losses from the drop in Prosperity Bancshares' long position.| International Bancshares vs. Home Federal Bancorp | International Bancshares vs. First Financial Northwest | International Bancshares vs. First Northwest Bancorp | International Bancshares vs. First Capital |
| Prosperity Bancshares vs. International Bancshares | Prosperity Bancshares vs. Finward Bancorp | Prosperity Bancshares vs. Aquagold International | Prosperity Bancshares vs. Thrivent High Yield |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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