Correlation Between Southside Bancshares, and Home BancShares
Can any of the company-specific risk be diversified away by investing in both Southside Bancshares, and Home BancShares 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 Southside Bancshares, and Home BancShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southside Bancshares, and Home BancShares, you can compare the effects of market volatilities on Southside Bancshares, and Home BancShares 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 Southside Bancshares, with a short position of Home BancShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southside Bancshares, and Home BancShares.
Diversification Opportunities for Southside Bancshares, and Home BancShares
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Southside and Home is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Southside Bancshares, and Home BancShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home BancShares and Southside 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 Southside Bancshares, are associated (or correlated) with Home BancShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home BancShares has no effect on the direction of Southside Bancshares, i.e., Southside Bancshares, and Home BancShares go up and down completely randomly.
Pair Corralation between Southside Bancshares, and Home BancShares
Given the investment horizon of 90 days Southside Bancshares, is expected to generate 1.18 times less return on investment than Home BancShares. In addition to that, Southside Bancshares, is 1.2 times more volatile than Home BancShares. It trades about 0.04 of its total potential returns per unit of risk. Home BancShares is currently generating about 0.06 per unit of volatility. If you would invest 2,272 in Home BancShares on August 31, 2024 and sell it today you would earn a total of 904.00 from holding Home BancShares or generate 39.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southside Bancshares, vs. Home BancShares
Performance |
| Timeline |
| Southside Bancshares, |
| Home BancShares |
Southside Bancshares, and Home BancShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southside Bancshares, and Home BancShares
The main advantage of trading using opposite Southside Bancshares, and Home BancShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southside Bancshares, position performs unexpectedly, Home BancShares 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 Home BancShares will offset losses from the drop in Home BancShares' long position.| Southside Bancshares, vs. Finward Bancorp | Southside Bancshares, vs. Community West Bancshares | Southside Bancshares, vs. First Financial Northwest | Southside Bancshares, vs. Northfield Bancorp |
| Home BancShares vs. Community West Bancshares | Home BancShares vs. First Financial Northwest | Home BancShares vs. First Northwest Bancorp | Home BancShares vs. First Capital |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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