Correlation Between Southern Missouri and National Bankshares
Can any of the company-specific risk be diversified away by investing in both Southern Missouri and National Bankshares 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 National Bankshares 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 National Bankshares, you can compare the effects of market volatilities on Southern Missouri and National Bankshares 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 National Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Missouri and National Bankshares.
Diversification Opportunities for Southern Missouri and National Bankshares
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Southern and National is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Southern Missouri Bancorp and National Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bankshares 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 National Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bankshares has no effect on the direction of Southern Missouri i.e., Southern Missouri and National Bankshares go up and down completely randomly.
Pair Corralation between Southern Missouri and National Bankshares
Given the investment horizon of 90 days Southern Missouri Bancorp is expected to generate 0.82 times more return on investment than National Bankshares. However, Southern Missouri Bancorp is 1.21 times less risky than National Bankshares. It trades about 0.07 of its potential returns per unit of risk. National Bankshares is currently generating about 0.02 per unit of risk. If you would invest 4,222 in Southern Missouri Bancorp on November 5, 2024 and sell it today you would earn a total of 1,561 from holding Southern Missouri Bancorp or generate 36.97% 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. National Bankshares
Performance |
| Timeline |
| Southern Missouri Bancorp |
| National Bankshares |
Southern Missouri and National Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Missouri and National Bankshares
The main advantage of trading using opposite Southern Missouri and National Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Missouri position performs unexpectedly, National Bankshares 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 National Bankshares will offset losses from the drop in National Bankshares' long position.| Southern Missouri vs. Commerzbank AG | Southern Missouri vs. Investar Holding Corp | Southern Missouri vs. Colony Bankcorp | Southern Missouri vs. Western New England |
| National Bankshares vs. Finward Bancorp | National Bankshares vs. Community West Bancshares | National Bankshares vs. First Financial Northwest | National Bankshares vs. Oak Valley Bancorp |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |