Correlation Between US Century and Southern States
Can any of the company-specific risk be diversified away by investing in both US Century and Southern States 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 US Century and Southern States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Century Bank and Southern States Bancshares, you can compare the effects of market volatilities on US Century and Southern States 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 US Century with a short position of Southern States. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Century and Southern States.
Diversification Opportunities for US Century and Southern States
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between USCB and Southern is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding US Century Bank and Southern States Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern States Banc and US Century 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 US Century Bank are associated (or correlated) with Southern States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern States Banc has no effect on the direction of US Century i.e., US Century and Southern States go up and down completely randomly.
Pair Corralation between US Century and Southern States
Given the investment horizon of 90 days US Century Bank is expected to generate 1.11 times more return on investment than Southern States. However, US Century is 1.11 times more volatile than Southern States Bancshares. It trades about 0.13 of its potential returns per unit of risk. Southern States Bancshares is currently generating about 0.08 per unit of risk. If you would invest 1,735 in US Century Bank on October 20, 2024 and sell it today you would earn a total of 85.00 from holding US Century Bank or generate 4.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Century Bank vs. Southern States Bancshares
Performance |
| Timeline |
| US Century Bank |
| Southern States Banc |
US Century and Southern States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Century and Southern States
The main advantage of trading using opposite US Century and Southern States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Century position performs unexpectedly, Southern States 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 States will offset losses from the drop in Southern States' long position.| US Century vs. Bank of San | US Century vs. Pioneer Bankcorp | US Century vs. Liberty Northwest Bancorp | US Century vs. Summit Bancshares |
| Southern States vs. Home Federal Bancorp | Southern States vs. Oak Valley Bancorp | Southern States vs. Mainstreet Bank | Southern States vs. Chemung Financial Corp |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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