Correlation Between Southern First and SouthState
Can any of the company-specific risk be diversified away by investing in both Southern First and SouthState 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 SouthState 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 SouthState, you can compare the effects of market volatilities on Southern First and SouthState 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 SouthState. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern First and SouthState.
Diversification Opportunities for Southern First and SouthState
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Southern and SouthState is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Southern First Bancshares and SouthState in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SouthState 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 SouthState. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SouthState has no effect on the direction of Southern First i.e., Southern First and SouthState go up and down completely randomly.
Pair Corralation between Southern First and SouthState
Given the investment horizon of 90 days Southern First is expected to generate 11.98 times less return on investment than SouthState. In addition to that, Southern First is 1.14 times more volatile than SouthState. It trades about 0.0 of its total potential returns per unit of risk. SouthState is currently generating about 0.03 per unit of volatility. If you would invest 8,264 in SouthState on August 23, 2024 and sell it today you would earn a total of 2,218 from holding SouthState or generate 26.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern First Bancshares vs. SouthState
Performance |
| Timeline |
| Southern First Bancshares |
| SouthState |
Southern First and SouthState Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern First and SouthState
The main advantage of trading using opposite Southern First and SouthState positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern First position performs unexpectedly, SouthState 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 SouthState will offset losses from the drop in SouthState's long position.| Southern First vs. First Community | Southern First vs. Old Point Financial | Southern First vs. Oak Valley Bancorp | Southern First vs. Chemung Financial Corp |
| SouthState vs. Pinnacle Financial Partners | SouthState vs. Southern First Bancshares | SouthState vs. SmartFinancial, | SouthState vs. WSFS Financial |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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