Correlation Between Prosperity Bancshares and OptimumBank Holdings
Can any of the company-specific risk be diversified away by investing in both Prosperity Bancshares and OptimumBank Holdings 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 OptimumBank Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosperity Bancshares and OptimumBank Holdings, you can compare the effects of market volatilities on Prosperity Bancshares and OptimumBank Holdings 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 OptimumBank Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosperity Bancshares and OptimumBank Holdings.
Diversification Opportunities for Prosperity Bancshares and OptimumBank Holdings
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Prosperity and OptimumBank is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Prosperity Bancshares and OptimumBank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OptimumBank Holdings 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 OptimumBank Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OptimumBank Holdings has no effect on the direction of Prosperity Bancshares i.e., Prosperity Bancshares and OptimumBank Holdings go up and down completely randomly.
Pair Corralation between Prosperity Bancshares and OptimumBank Holdings
Allowing for the 90-day total investment horizon Prosperity Bancshares is expected to under-perform the OptimumBank Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Prosperity Bancshares is 1.86 times less risky than OptimumBank Holdings. The stock trades about -0.12 of its potential returns per unit of risk. The OptimumBank Holdings is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 505.00 in OptimumBank Holdings on September 13, 2024 and sell it today you would lose (11.00) from holding OptimumBank Holdings or give up 2.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prosperity Bancshares vs. OptimumBank Holdings
Performance |
| Timeline |
| Prosperity Bancshares |
| OptimumBank Holdings |
Prosperity Bancshares and OptimumBank Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosperity Bancshares and OptimumBank Holdings
The main advantage of trading using opposite Prosperity Bancshares and OptimumBank Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosperity Bancshares position performs unexpectedly, OptimumBank Holdings 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 OptimumBank Holdings will offset losses from the drop in OptimumBank Holdings' 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 |
| OptimumBank Holdings vs. First National Bank | OptimumBank Holdings vs. TrustCo Bank Corp | OptimumBank Holdings vs. Inter Co Class | OptimumBank Holdings vs. Rhinebeck 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |