Correlation Between National Bankshares and SB Financial
Can any of the company-specific risk be diversified away by investing in both National Bankshares and SB Financial 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 National Bankshares and SB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Bankshares and SB Financial Group, you can compare the effects of market volatilities on National Bankshares and SB Financial 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 National Bankshares with a short position of SB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bankshares and SB Financial.
Diversification Opportunities for National Bankshares and SB Financial
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and SBFG is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding National Bankshares and SB Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SB Financial Group and National Bankshares 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 National Bankshares are associated (or correlated) with SB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SB Financial Group has no effect on the direction of National Bankshares i.e., National Bankshares and SB Financial go up and down completely randomly.
Pair Corralation between National Bankshares and SB Financial
Given the investment horizon of 90 days National Bankshares is expected to generate 2.3 times less return on investment than SB Financial. In addition to that, National Bankshares is 1.6 times more volatile than SB Financial Group. It trades about 0.12 of its total potential returns per unit of risk. SB Financial Group is currently generating about 0.44 per unit of volatility. If you would invest 2,076 in SB Financial Group on November 9, 2024 and sell it today you would earn a total of 324.00 from holding SB Financial Group or generate 15.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bankshares vs. SB Financial Group
Performance |
| Timeline |
| National Bankshares |
| SB Financial Group |
National Bankshares and SB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bankshares and SB Financial
The main advantage of trading using opposite National Bankshares and SB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bankshares position performs unexpectedly, SB Financial 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 SB Financial will offset losses from the drop in SB Financial's long position.| National Bankshares vs. Finward Bancorp | National Bankshares vs. Community West Bancshares | National Bankshares vs. First Financial Northwest | National Bankshares vs. Oak Valley Bancorp |
| SB Financial vs. Home Federal Bancorp | SB Financial vs. Lake Shore Bancorp | SB Financial vs. National Bankshares | SB Financial vs. Sound Financial 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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