Correlation Between Northrim BanCorp and Southern Missouri
Can any of the company-specific risk be diversified away by investing in both Northrim BanCorp and Southern Missouri 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 Northrim BanCorp and Southern Missouri into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northrim BanCorp and Southern Missouri Bancorp, you can compare the effects of market volatilities on Northrim BanCorp and Southern Missouri 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 Northrim BanCorp with a short position of Southern Missouri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northrim BanCorp and Southern Missouri.
Diversification Opportunities for Northrim BanCorp and Southern Missouri
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Northrim and Southern is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Northrim BanCorp and Southern Missouri Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Missouri Bancorp and Northrim BanCorp 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 Northrim BanCorp are associated (or correlated) with Southern Missouri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Missouri Bancorp has no effect on the direction of Northrim BanCorp i.e., Northrim BanCorp and Southern Missouri go up and down completely randomly.
Pair Corralation between Northrim BanCorp and Southern Missouri
Given the investment horizon of 90 days Northrim BanCorp is expected to generate 1.06 times more return on investment than Southern Missouri. However, Northrim BanCorp is 1.06 times more volatile than Southern Missouri Bancorp. It trades about 0.15 of its potential returns per unit of risk. Southern Missouri Bancorp is currently generating about 0.15 per unit of risk. If you would invest 5,378 in Northrim BanCorp on August 24, 2024 and sell it today you would earn a total of 3,130 from holding Northrim BanCorp or generate 58.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northrim BanCorp vs. Southern Missouri Bancorp
Performance |
| Timeline |
| Northrim BanCorp |
| Southern Missouri Bancorp |
Northrim BanCorp and Southern Missouri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northrim BanCorp and Southern Missouri
The main advantage of trading using opposite Northrim BanCorp and Southern Missouri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northrim BanCorp position performs unexpectedly, Southern Missouri 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 Missouri will offset losses from the drop in Southern Missouri's long position.| Northrim BanCorp vs. Peoples Bancorp | Northrim BanCorp vs. Eagle Bancorp | Northrim BanCorp vs. United Bankshares | Northrim BanCorp vs. Pacific Premier Bancorp |
| Southern Missouri vs. Commerzbank AG | Southern Missouri vs. Investar Holding Corp | Southern Missouri vs. Colony Bankcorp | Southern Missouri vs. Western New England |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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