Correlation Between Grand River and Great Southern

Can any of the company-specific risk be diversified away by investing in both Grand River 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 Grand River and Great Southern into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Grand River Commerce and Great Southern Bancorp, you can compare the effects of market volatilities on Grand River 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 Grand River with a short position of Great Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand River and Great Southern.

Diversification Opportunities for Grand River and Great Southern

-0.56

Correlation Coefficient

Grand River  Great Southern

Excellent diversification

The 3 months correlation between Grand and Great is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Grand River Commerce 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 Grand River 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 Grand River Commerce 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 Grand River i.e., Grand River and Great Southern go up and down completely randomly.

Pair Corralation between Grand River and Great Southern

Given the investment horizon of 90 days Grand River is expected to generate 1.02 times less return on investment than Great Southern. In addition to that, Grand River is 1.14 times more volatile than Great Southern Bancorp. It trades about 0.06 of its total potential returns per unit of risk. Great Southern Bancorp is currently generating about 0.07 per unit of volatility. If you would invest  5,824  in Great Southern Bancorp on September 3, 2024 and sell it today you would earn a total of  583.00  from holding Great Southern Bancorp or generate 10.01% return on investment over 90 days.

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

Grand River Commerce  vs.  Great Southern Bancorp

Grand River Commerce

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grand River Commerce are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Grand River may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Great Southern Bancorp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Great Southern Bancorp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental drivers, Great Southern may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Grand River and Great Southern

The main advantage of trading using opposite Grand River and Great Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand River 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 Grand River Commerce 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.