Correlation Between Southeastern Banking and Southern Michigan
Can any of the company-specific risk be diversified away by investing in both Southeastern Banking and Southern Michigan 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 Southeastern Banking and Southern Michigan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southeastern Banking Corp and Southern Michigan Bancorp, you can compare the effects of market volatilities on Southeastern Banking and Southern Michigan 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 Southeastern Banking with a short position of Southern Michigan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southeastern Banking and Southern Michigan.
Diversification Opportunities for Southeastern Banking and Southern Michigan
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Southeastern and Southern is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Southeastern Banking Corp and Southern Michigan Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Michigan Bancorp and Southeastern Banking 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 Southeastern Banking Corp are associated (or correlated) with Southern Michigan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Michigan Bancorp has no effect on the direction of Southeastern Banking i.e., Southeastern Banking and Southern Michigan go up and down completely randomly.
Pair Corralation between Southeastern Banking and Southern Michigan
Given the investment horizon of 90 days Southeastern Banking Corp is expected to generate 1.6 times more return on investment than Southern Michigan. However, Southeastern Banking is 1.6 times more volatile than Southern Michigan Bancorp. It trades about 0.09 of its potential returns per unit of risk. Southern Michigan Bancorp is currently generating about 0.1 per unit of risk. If you would invest 1,952 in Southeastern Banking Corp on August 29, 2024 and sell it today you would earn a total of 422.00 from holding Southeastern Banking Corp or generate 21.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.4% |
| Values | Daily Returns |
Southeastern Banking Corp vs. Southern Michigan Bancorp
Performance |
| Timeline |
| Southeastern Banking Corp |
| Southern Michigan Bancorp |
Southeastern Banking and Southern Michigan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southeastern Banking and Southern Michigan
The main advantage of trading using opposite Southeastern Banking and Southern Michigan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southeastern Banking position performs unexpectedly, Southern Michigan 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 Michigan will offset losses from the drop in Southern Michigan's long position.| Southeastern Banking vs. Israel Discount Bank | Southeastern Banking vs. Baraboo Bancorporation | Southeastern Banking vs. Danske Bank AS | Southeastern Banking vs. Jyske Bank AS |
| Southern Michigan vs. Invesco High Income | Southern Michigan vs. Blackrock Muniholdings Ny | Southern Michigan vs. Nuveen California Select | Southern Michigan vs. MFS Investment Grade |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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