Correlation Between Great Southern and Banc Of

Can any of the company-specific risk be diversified away by investing in both Great Southern and Banc Of 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 Banc Of 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 Banc of California,, you can compare the effects of market volatilities on Great Southern and Banc Of 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 Banc Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Southern and Banc Of.

Diversification Opportunities for Great Southern and Banc Of

0.84

Correlation Coefficient

Great Southern  Banc Of

Very poor diversification

The 3 months correlation between Great and Banc is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Great Southern Bancorp and Banc of California, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banc of California, 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 Banc Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banc of California, has no effect on the direction of Great Southern i.e., Great Southern and Banc Of go up and down completely randomly.

Pair Corralation between Great Southern and Banc Of

Given the investment horizon of 90 days Great Southern Bancorp is expected to generate 0.7 times more return on investment than Banc Of. However, Great Southern Bancorp is 1.43 times less risky than Banc Of. It trades about -0.03 of its potential returns per unit of risk. Banc of California, is currently generating about -0.03 per unit of risk. If you would invest  5,962  in Great Southern Bancorp on December 27, 2024 and sell it today you would lose (220.00) from holding Great Southern Bancorp or give up 3.69% of portfolio value over 90 days.

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

Great Southern Bancorp  vs.  Banc of California,

Great Southern Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Great Southern Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Great Southern is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Banc of California,

Risk-Adjusted Performance

Very Weak

Over the last 90 days Banc of California, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Banc Of is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Great Southern and Banc Of

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

The idea behind Great Southern Bancorp and Banc of California, 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.