Correlation Between Prosperity Bancshares and Kentucky First
Can any of the company-specific risk be diversified away by investing in both Prosperity Bancshares and Kentucky First 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 Kentucky First into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosperity Bancshares and Kentucky First Federal, you can compare the effects of market volatilities on Prosperity Bancshares and Kentucky First 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 Kentucky First. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosperity Bancshares and Kentucky First.
Diversification Opportunities for Prosperity Bancshares and Kentucky First
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Prosperity and Kentucky is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Prosperity Bancshares and Kentucky First Federal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kentucky First Federal 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 Kentucky First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kentucky First Federal has no effect on the direction of Prosperity Bancshares i.e., Prosperity Bancshares and Kentucky First go up and down completely randomly.
Pair Corralation between Prosperity Bancshares and Kentucky First
Allowing for the 90-day total investment horizon Prosperity Bancshares is expected to generate 0.64 times more return on investment than Kentucky First. However, Prosperity Bancshares is 1.55 times less risky than Kentucky First. It trades about 0.31 of its potential returns per unit of risk. Kentucky First Federal is currently generating about -0.2 per unit of risk. If you would invest 7,226 in Prosperity Bancshares on August 26, 2024 and sell it today you would earn a total of 1,204 from holding Prosperity Bancshares or generate 16.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prosperity Bancshares vs. Kentucky First Federal
Performance |
| Timeline |
| Prosperity Bancshares |
| Kentucky First Federal |
Prosperity Bancshares and Kentucky First Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosperity Bancshares and Kentucky First
The main advantage of trading using opposite Prosperity Bancshares and Kentucky First positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosperity Bancshares position performs unexpectedly, Kentucky First 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 Kentucky First will offset losses from the drop in Kentucky First'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 |
| Kentucky First vs. Home Federal Bancorp | Kentucky First vs. Lake Shore Bancorp | Kentucky First vs. Commerzbank AG | Kentucky First vs. Investar Holding Corp |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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