Correlation Between Truxton and Southern Michigan
Can any of the company-specific risk be diversified away by investing in both Truxton and Southern Michigan 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 Truxton and Southern Michigan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Truxton and Southern Michigan Bancorp, you can compare the effects of market volatilities on Truxton and Southern Michigan 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 Truxton with a short position of Southern Michigan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truxton and Southern Michigan.
Diversification Opportunities for Truxton and Southern Michigan
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Truxton and Southern is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Truxton and Southern Michigan Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Michigan Bancorp and Truxton 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 Truxton are associated (or correlated) with Southern Michigan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Michigan Bancorp has no effect on the direction of Truxton i.e., Truxton and Southern Michigan go up and down completely randomly.
Pair Corralation between Truxton and Southern Michigan
Given the investment horizon of 90 days Truxton is expected to generate 1.01 times more return on investment than Southern Michigan. However, Truxton is 1.01 times more volatile than Southern Michigan Bancorp. It trades about 0.12 of its potential returns per unit of risk. Southern Michigan Bancorp is currently generating about 0.08 per unit of risk. If you would invest 5,099 in Truxton on November 28, 2024 and sell it today you would earn a total of 2,901 from holding Truxton or generate 56.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 79.85% |
| Values | Daily Returns |
Truxton vs. Southern Michigan Bancorp
Performance |
| Timeline |
| Truxton |
| Southern Michigan Bancorp |
Truxton and Southern Michigan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Truxton and Southern Michigan
The main advantage of trading using opposite Truxton and Southern Michigan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truxton position performs unexpectedly, Southern Michigan 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 Michigan will offset losses from the drop in Southern Michigan's long position.| Truxton vs. Southern Michigan Bancorp | Truxton vs. Woodlands Financial Services | Truxton vs. Exchange Bank | Truxton vs. QNB Corp |
| Southern Michigan vs. FS Bancorp | Southern Michigan vs. Eastern Michigan Financial | Southern Michigan vs. Grand River Commerce | Southern Michigan vs. Bank of Botetourt |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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