Correlation Between Woodlands Financial and Great Southern
Can any of the company-specific risk be diversified away by investing in both Woodlands Financial and Great Southern 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 Woodlands Financial and Great Southern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Woodlands Financial Services and Great Southern Bancorp, you can compare the effects of market volatilities on Woodlands Financial and Great Southern 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 Woodlands Financial with a short position of Great Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woodlands Financial and Great Southern.
Diversification Opportunities for Woodlands Financial and Great Southern
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Woodlands and Great is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Woodlands Financial Services and Great Southern Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Southern Bancorp and Woodlands 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 Woodlands Financial Services are associated (or correlated) with Great Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Southern Bancorp has no effect on the direction of Woodlands Financial i.e., Woodlands Financial and Great Southern go up and down completely randomly.
Pair Corralation between Woodlands Financial and Great Southern
Given the investment horizon of 90 days Woodlands Financial Services is expected to under-perform the Great Southern. But the pink sheet apears to be less risky and, when comparing its historical volatility, Woodlands Financial Services is 2.07 times less risky than Great Southern. The pink sheet trades about -0.09 of its potential returns per unit of risk. The Great Southern Bancorp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 5,836 in Great Southern Bancorp on August 29, 2024 and sell it today you would earn a total of 487.00 from holding Great Southern Bancorp or generate 8.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woodlands Financial Services vs. Great Southern Bancorp
Performance |
| Timeline |
| Woodlands Financial |
| Great Southern Bancorp |
Woodlands Financial and Great Southern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woodlands Financial and Great Southern
The main advantage of trading using opposite Woodlands Financial and Great Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woodlands Financial position performs unexpectedly, Great Southern 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 Great Southern will offset losses from the drop in Great Southern's long position.The idea behind Woodlands Financial Services and Great Southern Bancorp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Great Southern vs. Fifth Third Bancorp | Great Southern vs. Huntington Bancshares Incorporated | Great Southern vs. MT Bank |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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