Correlation Between SouthState and National Bankshares
Can any of the company-specific risk be diversified away by investing in both SouthState 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 SouthState and National Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SouthState and National Bankshares, you can compare the effects of market volatilities on SouthState 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 SouthState with a short position of National Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of SouthState and National Bankshares.
Diversification Opportunities for SouthState and National Bankshares
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SouthState and National is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding SouthState and National Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bankshares 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 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 SouthState i.e., SouthState and National Bankshares go up and down completely randomly.
Pair Corralation between SouthState and National Bankshares
Considering the 90-day investment horizon SouthState is expected to generate 0.88 times more return on investment than National Bankshares. However, SouthState is 1.13 times less risky than National Bankshares. It trades about 0.16 of its potential returns per unit of risk. National Bankshares is currently generating about 0.04 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. National Bankshares
Performance |
| Timeline |
| SouthState |
| National Bankshares |
SouthState and National Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SouthState and National Bankshares
The main advantage of trading using opposite SouthState and National Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SouthState 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.| SouthState vs. Pinnacle Financial Partners | SouthState vs. Southern First Bancshares | SouthState vs. SmartFinancial, | SouthState vs. WSFS Financial |
| 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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