Correlation Between Texas Capital and Southern Missouri
Can any of the company-specific risk be diversified away by investing in both Texas Capital and Southern Missouri 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 Texas Capital and Southern Missouri into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Texas Capital Bancshares and Southern Missouri Bancorp, you can compare the effects of market volatilities on Texas Capital and Southern Missouri 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 Texas Capital with a short position of Southern Missouri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Texas Capital and Southern Missouri.
Diversification Opportunities for Texas Capital and Southern Missouri
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Texas and Southern is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Texas Capital Bancshares and Southern Missouri Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Missouri Bancorp and Texas Capital 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 Texas Capital Bancshares are associated (or correlated) with Southern Missouri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Missouri Bancorp has no effect on the direction of Texas Capital i.e., Texas Capital and Southern Missouri go up and down completely randomly.
Pair Corralation between Texas Capital and Southern Missouri
Given the investment horizon of 90 days Texas Capital Bancshares is expected to generate 0.83 times more return on investment than Southern Missouri. However, Texas Capital Bancshares is 1.2 times less risky than Southern Missouri. It trades about 0.24 of its potential returns per unit of risk. Southern Missouri Bancorp is currently generating about 0.16 per unit of risk. If you would invest 7,695 in Texas Capital Bancshares on September 1, 2024 and sell it today you would earn a total of 1,150 from holding Texas Capital Bancshares or generate 14.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Texas Capital Bancshares vs. Southern Missouri Bancorp
Performance |
| Timeline |
| Texas Capital Bancshares |
| Southern Missouri Bancorp |
Texas Capital and Southern Missouri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Texas Capital and Southern Missouri
The main advantage of trading using opposite Texas Capital and Southern Missouri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Texas Capital position performs unexpectedly, Southern Missouri 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 Southern Missouri will offset losses from the drop in Southern Missouri's long position.| Texas Capital vs. Affinity Bancshares | Texas Capital vs. Southern California Bancorp | Texas Capital vs. Auburn National Bancorporation | Texas Capital vs. BayCom Corp |
| Southern Missouri vs. Commerzbank AG | Southern Missouri vs. Investar Holding Corp | Southern Missouri vs. Colony Bankcorp | Southern Missouri vs. Western New England |
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 Stocks Directory module to find actively traded stocks across global markets.
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