Correlation Between Southern Missouri and Texas Capital
Can any of the company-specific risk be diversified away by investing in both Southern Missouri and Texas Capital 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 Texas Capital 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 Texas Capital Bancshares, you can compare the effects of market volatilities on Southern Missouri and Texas Capital 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 Texas Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Missouri and Texas Capital.
Diversification Opportunities for Southern Missouri and Texas Capital
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Southern and Texas is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Southern Missouri Bancorp and Texas Capital Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Capital Bancshares 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 Texas Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Capital Bancshares has no effect on the direction of Southern Missouri i.e., Southern Missouri and Texas Capital go up and down completely randomly.
Pair Corralation between Southern Missouri and Texas Capital
Given the investment horizon of 90 days Southern Missouri Bancorp is expected to generate 0.99 times more return on investment than Texas Capital. However, Southern Missouri Bancorp is 1.01 times less risky than Texas Capital. It trades about 0.04 of its potential returns per unit of risk. Texas Capital Bancshares is currently generating about 0.04 per unit of risk. If you would invest 4,586 in Southern Missouri Bancorp on September 3, 2024 and sell it today you would earn a total of 1,979 from holding Southern Missouri Bancorp or generate 43.15% 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. Texas Capital Bancshares
Performance |
| Timeline |
| Southern Missouri Bancorp |
| Texas Capital Bancshares |
Southern Missouri and Texas Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Missouri and Texas Capital
The main advantage of trading using opposite Southern Missouri and Texas Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Missouri position performs unexpectedly, Texas Capital 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 Texas Capital will offset losses from the drop in Texas Capital'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 |
| Texas Capital vs. JPMorgan Chase Co | Texas Capital vs. Citigroup | Texas Capital vs. Wells Fargo | Texas Capital vs. Toronto Dominion Bank |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |