Correlation Between VersaBank and Southern States
Can any of the company-specific risk be diversified away by investing in both VersaBank 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 VersaBank and Southern States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VersaBank and Southern States Bancshares, you can compare the effects of market volatilities on VersaBank 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 VersaBank with a short position of Southern States. Check out your portfolio center. Please also check ongoing floating volatility patterns of VersaBank and Southern States.
Diversification Opportunities for VersaBank and Southern States
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between VersaBank and Southern is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding VersaBank 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 VersaBank 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 VersaBank 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 VersaBank i.e., VersaBank and Southern States go up and down completely randomly.
Pair Corralation between VersaBank and Southern States
Given the investment horizon of 90 days VersaBank is expected to generate 1.36 times less return on investment than Southern States. But when comparing it to its historical volatility, VersaBank is 1.99 times less risky than Southern States. It trades about 0.32 of its potential returns per unit of risk. Southern States Bancshares is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 3,099 in Southern States Bancshares on August 25, 2024 and sell it today you would earn a total of 612.00 from holding Southern States Bancshares or generate 19.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
VersaBank vs. Southern States Bancshares
Performance |
| Timeline |
| VersaBank |
| Southern States Banc |
VersaBank and Southern States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VersaBank and Southern States
The main advantage of trading using opposite VersaBank and Southern States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VersaBank 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.| VersaBank vs. Mountain Commerce Bancorp | VersaBank vs. American Riviera Bank | VersaBank vs. Home Federal Bancorp | VersaBank vs. Village Bank and |
| 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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