Correlation Between Republic Bancorp and Southern Missouri
Can any of the company-specific risk be diversified away by investing in both Republic 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 Republic 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 Republic Bancorp and Southern Missouri Bancorp, you can compare the effects of market volatilities on Republic 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 Republic Bancorp with a short position of Southern Missouri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Republic Bancorp and Southern Missouri.
Diversification Opportunities for Republic Bancorp and Southern Missouri
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Republic and Southern is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Republic 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 Republic 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 Republic 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 Republic Bancorp i.e., Republic Bancorp and Southern Missouri go up and down completely randomly.
Pair Corralation between Republic Bancorp and Southern Missouri
Assuming the 90 days horizon Republic Bancorp is expected to generate 0.97 times more return on investment than Southern Missouri. However, Republic Bancorp is 1.03 times less risky than Southern Missouri. It trades about 0.15 of its potential returns per unit of risk. Southern Missouri Bancorp is currently generating about 0.14 per unit of risk. If you would invest 6,796 in Republic Bancorp on August 23, 2024 and sell it today you would earn a total of 805.00 from holding Republic Bancorp or generate 11.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Republic Bancorp vs. Southern Missouri Bancorp
Performance |
| Timeline |
| Republic Bancorp |
| Southern Missouri Bancorp |
Republic Bancorp and Southern Missouri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Republic Bancorp and Southern Missouri
The main advantage of trading using opposite Republic Bancorp and Southern Missouri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Republic 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.| Republic Bancorp vs. First Community | Republic Bancorp vs. Community West Bancshares | Republic Bancorp vs. First Financial Northwest | Republic Bancorp vs. First Northwest Bancorp |
| 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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