Correlation Between Southern BancShares and First Community
Can any of the company-specific risk be diversified away by investing in both Southern BancShares and First Community 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 Southern BancShares and First Community into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern BancShares NC and First Community Financial, you can compare the effects of market volatilities on Southern BancShares and First Community 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 Southern BancShares with a short position of First Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern BancShares and First Community.
Diversification Opportunities for Southern BancShares and First Community
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Southern and First is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Southern BancShares NC and First Community Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Community Financial and Southern 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 Southern BancShares NC are associated (or correlated) with First Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Community Financial has no effect on the direction of Southern BancShares i.e., Southern BancShares and First Community go up and down completely randomly.
Pair Corralation between Southern BancShares and First Community
Given the investment horizon of 90 days Southern BancShares NC is expected to generate 0.8 times more return on investment than First Community. However, Southern BancShares NC is 1.25 times less risky than First Community. It trades about 0.18 of its potential returns per unit of risk. First Community Financial is currently generating about -0.19 per unit of risk. If you would invest 610,101 in Southern BancShares NC on August 30, 2024 and sell it today you would earn a total of 114,899 from holding Southern BancShares NC or generate 18.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern BancShares NC vs. First Community Financial
Performance |
| Timeline |
| Southern BancShares |
| First Community Financial |
Southern BancShares and First Community Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern BancShares and First Community
The main advantage of trading using opposite Southern BancShares and First Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern BancShares position performs unexpectedly, First Community 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 First Community will offset losses from the drop in First Community's long position.| Southern BancShares vs. Nmb Financial Corp | Southern BancShares vs. Hang Seng Bank | Southern BancShares vs. Merchants Marine Bancorp | Southern BancShares vs. Mission Valley Bancorp |
| First Community vs. CCSB Financial Corp | First Community vs. Bank of Utica | First Community vs. BEO Bancorp | First Community vs. First Community |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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