Correlation Between Southern Missouri and First Mid
Can any of the company-specific risk be diversified away by investing in both Southern Missouri and First Mid 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 Missouri and First Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Missouri Bancorp and First Mid Illinois, you can compare the effects of market volatilities on Southern Missouri and First Mid 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 Missouri with a short position of First Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Missouri and First Mid.
Diversification Opportunities for Southern Missouri and First Mid
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Southern and First is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Southern Missouri Bancorp and First Mid Illinois in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Mid Illinois and Southern Missouri 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 Missouri Bancorp are associated (or correlated) with First Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Mid Illinois has no effect on the direction of Southern Missouri i.e., Southern Missouri and First Mid go up and down completely randomly.
Pair Corralation between Southern Missouri and First Mid
Given the investment horizon of 90 days Southern Missouri is expected to generate 1.09 times less return on investment than First Mid. In addition to that, Southern Missouri is 1.07 times more volatile than First Mid Illinois. It trades about 0.25 of its total potential returns per unit of risk. First Mid Illinois is currently generating about 0.29 per unit of volatility. If you would invest 3,559 in First Mid Illinois on November 9, 2024 and sell it today you would earn a total of 360.00 from holding First Mid Illinois or generate 10.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Missouri Bancorp vs. First Mid Illinois
Performance |
| Timeline |
| Southern Missouri Bancorp |
| First Mid Illinois |
Southern Missouri and First Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Missouri and First Mid
The main advantage of trading using opposite Southern Missouri and First Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Missouri position performs unexpectedly, First Mid 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 Mid will offset losses from the drop in First Mid's long position.| Southern Missouri vs. Commerzbank AG | Southern Missouri vs. Investar Holding Corp | Southern Missouri vs. Colony Bankcorp | Southern Missouri vs. Western New England |
| First Mid vs. Finward Bancorp | First Mid vs. Great Southern Bancorp | First Mid vs. Franklin Financial Services | First Mid vs. Community West Bancshares |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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