Correlation Between First Financial and Southside Bancshares,

Can any of the company-specific risk be diversified away by investing in both First Financial and Southside Bancshares, 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 First Financial and Southside Bancshares, into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between First Financial Northwest and Southside Bancshares,, you can compare the effects of market volatilities on First Financial and Southside Bancshares, 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 First Financial with a short position of Southside Bancshares,. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Financial and Southside Bancshares,.

Diversification Opportunities for First Financial and Southside Bancshares,

-0.07

Correlation Coefficient

First Financial  Southside Bancshares,

Good diversification

The 3 months correlation between First and Southside is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding First Financial Northwest and Southside Bancshares, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southside Bancshares, and First 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 First Financial Northwest are associated (or correlated) with Southside Bancshares,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southside Bancshares, has no effect on the direction of First Financial i.e., First Financial and Southside Bancshares, go up and down completely randomly.

Pair Corralation between First Financial and Southside Bancshares,

Given the investment horizon of 90 days First Financial Northwest is expected to under-perform the Southside Bancshares,. But the stock apears to be less risky and, when comparing its historical volatility, First Financial Northwest is 2.85 times less risky than Southside Bancshares,. The stock trades about -0.02 of its potential returns per unit of risk. The Southside Bancshares, is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,328  in Southside Bancshares, on September 5, 2024 and sell it today you would earn a total of  169.00  from holding Southside Bancshares, or generate 5.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

First Financial Northwest  vs.  Southside Bancshares,

First Financial Northwest

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Financial Northwest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, First Financial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Southside Bancshares,

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Southside Bancshares, are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Southside Bancshares, may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with First Financial and Southside Bancshares,

The main advantage of trading using opposite First Financial and Southside Bancshares, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Financial position performs unexpectedly, Southside Bancshares, 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 Southside Bancshares, will offset losses from the drop in Southside Bancshares,'s long position.

The idea behind First Financial Northwest and Southside Bancshares, 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.

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.