Correlation Between Southern Missouri and First National
Can any of the company-specific risk be diversified away by investing in both Southern Missouri and First National 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 National 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 National Corp, you can compare the effects of market volatilities on Southern Missouri and First National 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 National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Missouri and First National.
Diversification Opportunities for Southern Missouri and First National
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Southern and First is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Southern Missouri Bancorp and First National Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First National Corp 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 National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First National Corp has no effect on the direction of Southern Missouri i.e., Southern Missouri and First National go up and down completely randomly.
Pair Corralation between Southern Missouri and First National
Given the investment horizon of 90 days Southern Missouri is expected to generate 1.0 times less return on investment than First National. In addition to that, Southern Missouri is 1.77 times more volatile than First National Corp. It trades about 0.16 of its total potential returns per unit of risk. First National Corp is currently generating about 0.29 per unit of volatility. If you would invest 2,100 in First National Corp on August 28, 2024 and sell it today you would earn a total of 266.00 from holding First National Corp or generate 12.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Missouri Bancorp vs. First National Corp
Performance |
| Timeline |
| Southern Missouri Bancorp |
| First National Corp |
Southern Missouri and First National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Missouri and First National
The main advantage of trading using opposite Southern Missouri and First National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Missouri position performs unexpectedly, First National 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 National will offset losses from the drop in First National's long position.| Southern Missouri vs. Fifth Third Bancorp | Southern Missouri vs. Zions Bancorporation | Southern Missouri vs. Huntington Bancshares Incorporated | Southern Missouri vs. Comerica |
| First National vs. Fifth Third Bancorp | First National vs. Zions Bancorporation | First National vs. Huntington Bancshares Incorporated | First National vs. Comerica |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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