Correlation Between Norwood Financial and Great Southern
Can any of the company-specific risk be diversified away by investing in both Norwood Financial and Great Southern 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 Norwood Financial and Great Southern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Norwood Financial Corp and Great Southern Bancorp, you can compare the effects of market volatilities on Norwood Financial and Great Southern 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 Norwood Financial with a short position of Great Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwood Financial and Great Southern.
Diversification Opportunities for Norwood Financial and Great Southern
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Norwood and Great is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Norwood Financial Corp and Great Southern Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Southern Bancorp and Norwood 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 Norwood Financial Corp are associated (or correlated) with Great Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Southern Bancorp has no effect on the direction of Norwood Financial i.e., Norwood Financial and Great Southern go up and down completely randomly.
Pair Corralation between Norwood Financial and Great Southern
Given the investment horizon of 90 days Norwood Financial Corp is expected to generate 0.71 times more return on investment than Great Southern. However, Norwood Financial Corp is 1.4 times less risky than Great Southern. It trades about 0.2 of its potential returns per unit of risk. Great Southern Bancorp is currently generating about 0.12 per unit of risk. If you would invest 2,738 in Norwood Financial Corp on August 29, 2024 and sell it today you would earn a total of 297.00 from holding Norwood Financial Corp or generate 10.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norwood Financial Corp vs. Great Southern Bancorp
Performance |
| Timeline |
| Norwood Financial Corp |
| Great Southern Bancorp |
Norwood Financial and Great Southern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norwood Financial and Great Southern
The main advantage of trading using opposite Norwood Financial and Great Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwood Financial position performs unexpectedly, Great Southern 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 Great Southern will offset losses from the drop in Great Southern's long position.| Norwood Financial vs. Chemung Financial Corp | Norwood Financial vs. Home Federal Bancorp | Norwood Financial vs. Rhinebeck Bancorp | Norwood Financial vs. Finward Bancorp |
| Great Southern vs. Fifth Third Bancorp | Great Southern vs. Huntington Bancshares Incorporated | Great Southern vs. MT Bank |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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