Correlation Between Lakeland Financial and German American
Can any of the company-specific risk be diversified away by investing in both Lakeland Financial and German American 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 Lakeland Financial and German American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lakeland Financial and German American Bancorp, you can compare the effects of market volatilities on Lakeland Financial and German American 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 Lakeland Financial with a short position of German American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lakeland Financial and German American.
Diversification Opportunities for Lakeland Financial and German American
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lakeland and German is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Lakeland Financial and German American Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on German American Bancorp and Lakeland Financial 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 Lakeland Financial are associated (or correlated) with German American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of German American Bancorp has no effect on the direction of Lakeland Financial i.e., Lakeland Financial and German American go up and down completely randomly.
Pair Corralation between Lakeland Financial and German American
Given the investment horizon of 90 days Lakeland Financial is expected to generate 1.05 times less return on investment than German American. But when comparing it to its historical volatility, Lakeland Financial is 1.04 times less risky than German American. It trades about 0.2 of its potential returns per unit of risk. German American Bancorp is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 4,044 in German American Bancorp on August 27, 2024 and sell it today you would earn a total of 552.00 from holding German American Bancorp or generate 13.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lakeland Financial vs. German American Bancorp
Performance |
| Timeline |
| Lakeland Financial |
| German American Bancorp |
Lakeland Financial and German American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lakeland Financial and German American
The main advantage of trading using opposite Lakeland Financial and German American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lakeland Financial position performs unexpectedly, German American 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 German American will offset losses from the drop in German American's long position.| Lakeland Financial vs. Home Bancorp | Lakeland Financial vs. Heritage Financial | Lakeland Financial vs. First Northwest Bancorp | Lakeland Financial vs. HomeTrust Bancshares |
| German American vs. Lakeland Financial | German American vs. Great Southern Bancorp | German American vs. First Merchants | German American vs. First 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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