Correlation Between Prosperity Bancshares and Investar Holding
Can any of the company-specific risk be diversified away by investing in both Prosperity Bancshares and Investar Holding 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 Investar Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosperity Bancshares and Investar Holding Corp, you can compare the effects of market volatilities on Prosperity Bancshares and Investar Holding 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 Investar Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosperity Bancshares and Investar Holding.
Diversification Opportunities for Prosperity Bancshares and Investar Holding
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Prosperity and Investar is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Prosperity Bancshares and Investar Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investar Holding Corp 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 Investar Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investar Holding Corp has no effect on the direction of Prosperity Bancshares i.e., Prosperity Bancshares and Investar Holding go up and down completely randomly.
Pair Corralation between Prosperity Bancshares and Investar Holding
Allowing for the 90-day total investment horizon Prosperity Bancshares is expected to generate 1.03 times less return on investment than Investar Holding. But when comparing it to its historical volatility, Prosperity Bancshares is 1.36 times less risky than Investar Holding. It trades about 0.29 of its potential returns per unit of risk. Investar Holding Corp is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 2,123 in Investar Holding Corp on August 28, 2024 and sell it today you would earn a total of 313.00 from holding Investar Holding Corp or generate 14.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prosperity Bancshares vs. Investar Holding Corp
Performance |
| Timeline |
| Prosperity Bancshares |
| Investar Holding Corp |
Prosperity Bancshares and Investar Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosperity Bancshares and Investar Holding
The main advantage of trading using opposite Prosperity Bancshares and Investar Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosperity Bancshares position performs unexpectedly, Investar Holding 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 Investar Holding will offset losses from the drop in Investar Holding's long position.| Prosperity Bancshares vs. Fifth Third Bancorp | Prosperity Bancshares vs. Zions Bancorporation | Prosperity Bancshares vs. Huntington Bancshares Incorporated | Prosperity Bancshares vs. Comerica |
| Investar Holding vs. Magyar Bancorp | Investar Holding vs. Home Federal Bancorp | Investar Holding vs. Community West Bancshares | Investar Holding vs. First Northwest 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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