Correlation Between Great Southern and MVB Financial

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

Diversification Opportunities for Great Southern and MVB Financial

0.79

Correlation Coefficient

Great Southern  MVB Financial

Poor diversification

The 3 months correlation between Great and MVB is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Great Southern Bancorp and MVB Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MVB 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 MVB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MVB Financial Corp has no effect on the direction of Great Southern i.e., Great Southern and MVB Financial go up and down completely randomly.

Pair Corralation between Great Southern and MVB Financial

Given the investment horizon of 90 days Great Southern is expected to generate 1.19 times less return on investment than MVB Financial. But when comparing it to its historical volatility, Great Southern Bancorp is 1.39 times less risky than MVB Financial. It trades about 0.19 of its potential returns per unit of risk. MVB Financial Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,874  in MVB Financial Corp on September 5, 2024 and sell it today you would earn a total of  285.00  from holding MVB Financial Corp or generate 15.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Great Southern Bancorp  vs.  MVB Financial Corp

Great Southern Bancorp

Risk-Adjusted Performance

7 of 100

Modest

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 unsteady fundamental drivers, Great Southern exhibited solid returns over the last few months and may actually be approaching a breakup point.

MVB Financial Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MVB Financial Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady fundamental drivers, MVB Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Great Southern and MVB Financial

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

The idea behind Great Southern Bancorp and MVB 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.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.