Correlation Between Southern First and International Bancshares
Can any of the company-specific risk be diversified away by investing in both Southern First and International 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 Southern First and International Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern First Bancshares and International Bancshares, you can compare the effects of market volatilities on Southern First and International 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 Southern First with a short position of International Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern First and International Bancshares.
Diversification Opportunities for Southern First and International Bancshares
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Southern and International is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Southern First Bancshares and International Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Bancshares and Southern First 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 First Bancshares are associated (or correlated) with International Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Bancshares has no effect on the direction of Southern First i.e., Southern First and International Bancshares go up and down completely randomly.
Pair Corralation between Southern First and International Bancshares
Given the investment horizon of 90 days Southern First Bancshares is expected to under-perform the International Bancshares. In addition to that, Southern First is 1.14 times more volatile than International Bancshares. It trades about -0.23 of its total potential returns per unit of risk. International Bancshares is currently generating about -0.04 per unit of volatility. If you would invest 6,499 in International Bancshares on November 25, 2024 and sell it today you would lose (102.00) from holding International Bancshares or give up 1.57% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Southern First Bancshares vs. International Bancshares
Performance |
Timeline |
Southern First Bancshares |
International Bancshares |
Southern First and International Bancshares Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Southern First and International Bancshares
The main advantage of trading using opposite Southern First and International Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern First position performs unexpectedly, International 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 International Bancshares will offset losses from the drop in International Bancshares' long position.Southern First vs. First Community | ||
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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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