Correlation Between Great Southern and Bayfirst Financial

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

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

Diversification Opportunities for Great Southern and Bayfirst Financial

0.26

Correlation Coefficient

Great Southern  Bayfirst Financial

Modest diversification

The 3 months correlation between Great and Bayfirst is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Great Southern Bancorp and Bayfirst Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayfirst Financial Corp and Great Southern 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 Great Southern Bancorp are associated (or correlated) with Bayfirst Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayfirst Financial Corp has no effect on the direction of Great Southern i.e., Great Southern and Bayfirst Financial go up and down completely randomly.

Pair Corralation between Great Southern and Bayfirst Financial

Given the investment horizon of 90 days Great Southern Bancorp is expected to generate 0.83 times more return on investment than Bayfirst Financial. However, Great Southern Bancorp is 1.2 times less risky than Bayfirst Financial. It trades about 0.03 of its potential returns per unit of risk. Bayfirst Financial Corp is currently generating about 0.0 per unit of risk. If you would invest  5,645  in Great Southern Bancorp on September 16, 2024 and sell it today you would earn a total of  942.00  from holding Great Southern Bancorp or generate 16.69% return on investment over 90 days.

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

Great Southern Bancorp  vs.  Bayfirst Financial Corp

Great Southern Bancorp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Great Southern Bancorp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental drivers, Great Southern exhibited solid returns over the last few months and may actually be approaching a breakup point.

Bayfirst Financial Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bayfirst Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Bayfirst Financial is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Great Southern and Bayfirst Financial

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

The idea behind Great Southern Bancorp and Bayfirst Financial Corp 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.