Correlation Between Lakeland Financial and Independent Bank
Can any of the company-specific risk be diversified away by investing in both Lakeland Financial and Independent 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 Lakeland Financial and Independent Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lakeland Financial and Independent Bank, you can compare the effects of market volatilities on Lakeland Financial and Independent 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 Lakeland Financial with a short position of Independent Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lakeland Financial and Independent Bank.
Diversification Opportunities for Lakeland Financial and Independent Bank
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lakeland and Independent is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Lakeland Financial and Independent Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Independent Bank 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 Independent Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Independent Bank has no effect on the direction of Lakeland Financial i.e., Lakeland Financial and Independent Bank go up and down completely randomly.
Pair Corralation between Lakeland Financial and Independent Bank
Given the investment horizon of 90 days Lakeland Financial is expected to generate 3.67 times less return on investment than Independent Bank. In addition to that, Lakeland Financial is 1.02 times more volatile than Independent Bank. It trades about 0.02 of its total potential returns per unit of risk. Independent Bank is currently generating about 0.06 per unit of volatility. If you would invest 2,189 in Independent Bank on August 30, 2024 and sell it today you would earn a total of 1,605 from holding Independent Bank or generate 73.32% 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. Independent Bank
Performance |
| Timeline |
| Lakeland Financial |
| Independent Bank |
Lakeland Financial and Independent Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lakeland Financial and Independent Bank
The main advantage of trading using opposite Lakeland Financial and Independent Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lakeland Financial position performs unexpectedly, Independent 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 Independent Bank will offset losses from the drop in Independent Bank's long position.| Lakeland Financial vs. Home Bancorp | Lakeland Financial vs. Heritage Financial | Lakeland Financial vs. First Northwest Bancorp | Lakeland Financial vs. HomeTrust Bancshares |
| Independent Bank vs. First Northwest Bancorp | Independent Bank vs. Community West Bancshares | Independent Bank vs. First Financial Northwest | Independent Bank vs. Great Southern Bancorp |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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