Correlation Between Tri-County Financial and Southern Michigan
Can any of the company-specific risk be diversified away by investing in both Tri-County Financial 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 Tri-County Financial and Southern Michigan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tri County Financial Group and Southern Michigan Bancorp, you can compare the effects of market volatilities on Tri-County Financial 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 Tri-County Financial with a short position of Southern Michigan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tri-County Financial and Southern Michigan.
Diversification Opportunities for Tri-County Financial and Southern Michigan
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Tri-County and Southern is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Tri County Financial Group 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 Tri-County Financial 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 Tri County Financial Group 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 Tri-County Financial i.e., Tri-County Financial and Southern Michigan go up and down completely randomly.
Pair Corralation between Tri-County Financial and Southern Michigan
Given the investment horizon of 90 days Tri-County Financial is expected to generate 1.7 times less return on investment than Southern Michigan. But when comparing it to its historical volatility, Tri County Financial Group is 1.02 times less risky than Southern Michigan. It trades about 0.06 of its potential returns per unit of risk. Southern Michigan Bancorp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,616 in Southern Michigan Bancorp on August 29, 2024 and sell it today you would earn a total of 259.00 from holding Southern Michigan Bancorp or generate 16.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tri County Financial Group vs. Southern Michigan Bancorp
Performance |
| Timeline |
| Tri County Financial |
| Southern Michigan Bancorp |
Tri-County Financial and Southern Michigan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tri-County Financial and Southern Michigan
The main advantage of trading using opposite Tri-County Financial and Southern Michigan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tri-County Financial 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.| Tri-County Financial vs. Taylor Calvin B | Tri-County Financial vs. United Bancorporation of | Tri-County Financial vs. Virginia National Bankshares | Tri-County Financial vs. Lyons Bancorp |
| Southern Michigan vs. Invesco High Income | Southern Michigan vs. Blackrock Muniholdings Ny | Southern Michigan vs. Nuveen California Select | Southern Michigan vs. MFS Investment Grade |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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