Correlation Between Orange County and Great Southern
Can any of the company-specific risk be diversified away by investing in both Orange County 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 Orange County and Great Southern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orange County Bancorp and Great Southern Bancorp, you can compare the effects of market volatilities on Orange County 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 Orange County with a short position of Great Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orange County and Great Southern.
Diversification Opportunities for Orange County and Great Southern
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Orange and Great is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Orange County Bancorp 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 Orange County 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 Orange County Bancorp 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 Orange County i.e., Orange County and Great Southern go up and down completely randomly.
Pair Corralation between Orange County and Great Southern
Considering the 90-day investment horizon Orange County is expected to generate 1.05 times less return on investment than Great Southern. But when comparing it to its historical volatility, Orange County Bancorp is 1.17 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 0.18 of returns per unit of risk over similar time horizon. If you would invest 5,669 in Great Southern Bancorp on September 1, 2024 and sell it today you would earn a total of 738.00 from holding Great Southern Bancorp or generate 13.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orange County Bancorp vs. Great Southern Bancorp
Performance |
| Timeline |
| Orange County Bancorp |
| Great Southern Bancorp |
Orange County and Great Southern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orange County and Great Southern
The main advantage of trading using opposite Orange County and Great Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orange County 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.| Orange County vs. Southern States Bancshares | Orange County vs. US Century Bank | Orange County vs. Third Coast Bancshares | Orange County vs. Esquire Financial Holdings |
| Great Southern vs. First Northwest Bancorp | Great Southern vs. Community West Bancshares | Great Southern vs. First Financial Northwest | Great Southern vs. First Capital |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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