Correlation Between Prosperity Bancshares and Peoples Fin
Can any of the company-specific risk be diversified away by investing in both Prosperity Bancshares and Peoples Fin 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 Peoples Fin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosperity Bancshares and Peoples Fin, you can compare the effects of market volatilities on Prosperity Bancshares and Peoples Fin 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 Peoples Fin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosperity Bancshares and Peoples Fin.
Diversification Opportunities for Prosperity Bancshares and Peoples Fin
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Prosperity and Peoples is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Prosperity Bancshares and Peoples Fin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peoples Fin 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 Peoples Fin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peoples Fin has no effect on the direction of Prosperity Bancshares i.e., Prosperity Bancshares and Peoples Fin go up and down completely randomly.
Pair Corralation between Prosperity Bancshares and Peoples Fin
Allowing for the 90-day total investment horizon Prosperity Bancshares is expected to generate 1.34 times less return on investment than Peoples Fin. But when comparing it to its historical volatility, Prosperity Bancshares is 1.64 times less risky than Peoples Fin. It trades about 0.17 of its potential returns per unit of risk. Peoples Fin is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 3,836 in Peoples Fin on August 28, 2024 and sell it today you would earn a total of 2,040 from holding Peoples Fin or generate 53.18% 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. Peoples Fin
Performance |
| Timeline |
| Prosperity Bancshares |
| Peoples Fin |
Prosperity Bancshares and Peoples Fin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosperity Bancshares and Peoples Fin
The main advantage of trading using opposite Prosperity Bancshares and Peoples Fin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosperity Bancshares position performs unexpectedly, Peoples Fin 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 Peoples Fin will offset losses from the drop in Peoples Fin'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 |
| Peoples Fin vs. Fifth Third Bancorp | Peoples Fin vs. Huntington Bancshares Incorporated | Peoples Fin 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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