Correlation Between Prosperity Bancshares and First Guaranty
Can any of the company-specific risk be diversified away by investing in both Prosperity Bancshares and First Guaranty 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 Prosperity Bancshares and First Guaranty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosperity Bancshares and First Guaranty Bancshares, you can compare the effects of market volatilities on Prosperity Bancshares and First Guaranty 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 Prosperity Bancshares with a short position of First Guaranty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosperity Bancshares and First Guaranty.
Diversification Opportunities for Prosperity Bancshares and First Guaranty
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Prosperity and First is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Prosperity Bancshares and First Guaranty Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Guaranty Bancshares and Prosperity Bancshares 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 Prosperity Bancshares are associated (or correlated) with First Guaranty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Guaranty Bancshares has no effect on the direction of Prosperity Bancshares i.e., Prosperity Bancshares and First Guaranty go up and down completely randomly.
Pair Corralation between Prosperity Bancshares and First Guaranty
Allowing for the 90-day total investment horizon Prosperity Bancshares is expected to generate 0.67 times more return on investment than First Guaranty. However, Prosperity Bancshares is 1.49 times less risky than First Guaranty. It trades about 0.04 of its potential returns per unit of risk. First Guaranty Bancshares is currently generating about -0.03 per unit of risk. If you would invest 6,692 in Prosperity Bancshares on August 29, 2024 and sell it today you would earn a total of 1,781 from holding Prosperity Bancshares or generate 26.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prosperity Bancshares vs. First Guaranty Bancshares
Performance |
| Timeline |
| Prosperity Bancshares |
| First Guaranty Bancshares |
Prosperity Bancshares and First Guaranty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosperity Bancshares and First Guaranty
The main advantage of trading using opposite Prosperity Bancshares and First Guaranty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosperity Bancshares position performs unexpectedly, First Guaranty 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 First Guaranty will offset losses from the drop in First Guaranty's long position.| Prosperity Bancshares vs. Heartland Financial USA | Prosperity Bancshares vs. Heritage Commerce Corp | Prosperity Bancshares vs. Business First Bancshares | Prosperity Bancshares vs. German American Bancorp |
| First Guaranty vs. Fifth Third Bancorp | First Guaranty vs. Huntington Bancshares Incorporated | First Guaranty 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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