Correlation Between Parke Bancorp and Southern Missouri
Can any of the company-specific risk be diversified away by investing in both Parke Bancorp and Southern Missouri 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 Parke Bancorp and Southern Missouri into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parke Bancorp and Southern Missouri Bancorp, you can compare the effects of market volatilities on Parke Bancorp and Southern Missouri 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 Parke Bancorp with a short position of Southern Missouri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parke Bancorp and Southern Missouri.
Diversification Opportunities for Parke Bancorp and Southern Missouri
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Parke and Southern is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Parke Bancorp and Southern Missouri Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Missouri Bancorp and Parke Bancorp 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 Parke Bancorp are associated (or correlated) with Southern Missouri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Missouri Bancorp has no effect on the direction of Parke Bancorp i.e., Parke Bancorp and Southern Missouri go up and down completely randomly.
Pair Corralation between Parke Bancorp and Southern Missouri
Given the investment horizon of 90 days Parke Bancorp is expected to generate 1.26 times less return on investment than Southern Missouri. But when comparing it to its historical volatility, Parke Bancorp is 1.22 times less risky than Southern Missouri. It trades about 0.14 of its potential returns per unit of risk. Southern Missouri Bancorp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 4,174 in Southern Missouri Bancorp on August 24, 2024 and sell it today you would earn a total of 2,352 from holding Southern Missouri Bancorp or generate 56.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Parke Bancorp vs. Southern Missouri Bancorp
Performance |
| Timeline |
| Parke Bancorp |
| Southern Missouri Bancorp |
Parke Bancorp and Southern Missouri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parke Bancorp and Southern Missouri
The main advantage of trading using opposite Parke Bancorp and Southern Missouri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parke Bancorp position performs unexpectedly, Southern Missouri 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 Southern Missouri will offset losses from the drop in Southern Missouri's long position.| Parke Bancorp vs. Sound Financial Bancorp | Parke Bancorp vs. Finward Bancorp | Parke Bancorp vs. Franklin Financial Services | Parke Bancorp vs. Community West Bancshares |
| Southern Missouri vs. Commerzbank AG | Southern Missouri vs. Investar Holding Corp | Southern Missouri vs. Colony Bankcorp | Southern Missouri vs. Western New England |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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