Correlation Between SouthState and ServisFirst Bancshares
Can any of the company-specific risk be diversified away by investing in both SouthState and ServisFirst 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 ServisFirst Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SouthState and ServisFirst Bancshares, you can compare the effects of market volatilities on SouthState and ServisFirst 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 ServisFirst Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of SouthState and ServisFirst Bancshares.
Diversification Opportunities for SouthState and ServisFirst Bancshares
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SouthState and ServisFirst is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding SouthState and ServisFirst Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ServisFirst 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 ServisFirst Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ServisFirst Bancshares has no effect on the direction of SouthState i.e., SouthState and ServisFirst Bancshares go up and down completely randomly.
Pair Corralation between SouthState and ServisFirst Bancshares
Considering the 90-day investment horizon SouthState is expected to generate 1.05 times less return on investment than ServisFirst Bancshares. In addition to that, SouthState is 1.16 times more volatile than ServisFirst Bancshares. It trades about 0.2 of its total potential returns per unit of risk. ServisFirst Bancshares is currently generating about 0.24 per unit of volatility. If you would invest 8,580 in ServisFirst Bancshares on August 28, 2024 and sell it today you would earn a total of 1,320 from holding ServisFirst Bancshares or generate 15.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SouthState vs. ServisFirst Bancshares
Performance |
| Timeline |
| SouthState |
| ServisFirst Bancshares |
SouthState and ServisFirst Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SouthState and ServisFirst Bancshares
The main advantage of trading using opposite SouthState and ServisFirst Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SouthState position performs unexpectedly, ServisFirst 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 ServisFirst Bancshares will offset losses from the drop in ServisFirst Bancshares' long position.| SouthState vs. Pinnacle Financial Partners | SouthState vs. Southern First Bancshares | SouthState vs. SmartFinancial, | SouthState vs. WSFS Financial |
| ServisFirst Bancshares vs. Home BancShares | ServisFirst Bancshares vs. CNB Financial | ServisFirst Bancshares vs. SouthState | ServisFirst Bancshares vs. WSFS Financial |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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