Correlation Between Prosperity Bancshares and South Plains
Can any of the company-specific risk be diversified away by investing in both Prosperity Bancshares and South Plains 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 South Plains into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosperity Bancshares and South Plains Financial, you can compare the effects of market volatilities on Prosperity Bancshares and South Plains 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 South Plains. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosperity Bancshares and South Plains.
Diversification Opportunities for Prosperity Bancshares and South Plains
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Prosperity and South is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Prosperity Bancshares and South Plains Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South Plains Financial 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 South Plains. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South Plains Financial has no effect on the direction of Prosperity Bancshares i.e., Prosperity Bancshares and South Plains go up and down completely randomly.
Pair Corralation between Prosperity Bancshares and South Plains
Allowing for the 90-day total investment horizon Prosperity Bancshares is expected to generate 0.66 times more return on investment than South Plains. However, Prosperity Bancshares is 1.51 times less risky than South Plains. It trades about 0.27 of its potential returns per unit of risk. South Plains Financial is currently generating about 0.14 per unit of risk. If you would invest 7,468 in Prosperity Bancshares on November 3, 2024 and sell it today you would earn a total of 532.00 from holding Prosperity Bancshares or generate 7.12% 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. South Plains Financial
Performance |
| Timeline |
| Prosperity Bancshares |
| South Plains Financial |
Prosperity Bancshares and South Plains Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosperity Bancshares and South Plains
The main advantage of trading using opposite Prosperity Bancshares and South Plains positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosperity Bancshares position performs unexpectedly, South Plains 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 South Plains will offset losses from the drop in South Plains' long position.| Prosperity Bancshares vs. US Bancorp | Prosperity Bancshares vs. Truist Financial Corp | Prosperity Bancshares vs. Fifth Third Bancorp | Prosperity Bancshares vs. KeyCorp |
| South Plains vs. Sound Financial Bancorp | South Plains vs. Finward Bancorp | South Plains vs. Franklin Financial Services | South Plains vs. Community West Bancshares |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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