Correlation Between SouthState and Home BancShares
Can any of the company-specific risk be diversified away by investing in both SouthState and Home BancShares 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 SouthState and Home BancShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SouthState and Home BancShares, you can compare the effects of market volatilities on SouthState and Home BancShares 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 SouthState with a short position of Home BancShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of SouthState and Home BancShares.
Diversification Opportunities for SouthState and Home BancShares
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SouthState and Home is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding SouthState and Home BancShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home BancShares and SouthState 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 SouthState are associated (or correlated) with Home BancShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home BancShares has no effect on the direction of SouthState i.e., SouthState and Home BancShares go up and down completely randomly.
Pair Corralation between SouthState and Home BancShares
Considering the 90-day investment horizon SouthState is expected to generate 1.2 times more return on investment than Home BancShares. However, SouthState is 1.2 times more volatile than Home BancShares. It trades about 0.16 of its potential returns per unit of risk. Home BancShares is currently generating about 0.16 per unit of risk. If you would invest 7,376 in SouthState on August 27, 2024 and sell it today you would earn a total of 3,817 from holding SouthState or generate 51.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SouthState vs. Home BancShares
Performance |
| Timeline |
| SouthState |
| Home BancShares |
SouthState and Home BancShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SouthState and Home BancShares
The main advantage of trading using opposite SouthState and Home BancShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SouthState position performs unexpectedly, Home BancShares 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 Home BancShares will offset losses from the drop in Home BancShares' long position.| SouthState vs. Pinnacle Financial Partners | SouthState vs. Southern First Bancshares | SouthState vs. SmartFinancial, | SouthState vs. WSFS Financial |
| Home BancShares vs. Community West Bancshares | Home BancShares vs. First Financial Northwest | Home BancShares vs. First Northwest Bancorp | Home BancShares vs. First Capital |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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