Correlation Between International Bancshares and Southern First
Can any of the company-specific risk be diversified away by investing in both International Bancshares and Southern First 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 Southern First into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Bancshares and Southern First Bancshares, you can compare the effects of market volatilities on International Bancshares and Southern First 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 Southern First. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Bancshares and Southern First.
Diversification Opportunities for International Bancshares and Southern First
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between International and Southern is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding International Bancshares and Southern First Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern First 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 Southern First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern First Bancshares has no effect on the direction of International Bancshares i.e., International Bancshares and Southern First go up and down completely randomly.
Pair Corralation between International Bancshares and Southern First
Given the investment horizon of 90 days International Bancshares is expected to generate 0.54 times more return on investment than Southern First. However, International Bancshares is 1.84 times less risky than Southern First. It trades about 0.22 of its potential returns per unit of risk. Southern First Bancshares is currently generating about 0.1 per unit of risk. If you would invest 6,390 in International Bancshares on November 9, 2024 and sell it today you would earn a total of 401.00 from holding International Bancshares or generate 6.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Bancshares vs. Southern First Bancshares
Performance |
| Timeline |
| International Bancshares |
| Southern First Bancshares |
International Bancshares and Southern First Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Bancshares and Southern First
The main advantage of trading using opposite International Bancshares and Southern First positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Bancshares position performs unexpectedly, Southern First 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 Southern First will offset losses from the drop in Southern First's 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 |
| Southern First vs. First Community | Southern First vs. Old Point Financial | Southern First vs. Oak Valley Bancorp | Southern First vs. Chemung Financial Corp |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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