Correlation Between Simmons First and Renasant

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

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

Diversification Opportunities for Simmons First and Renasant

0.74

Correlation Coefficient

Simmons First  Renasant

Poor diversification

The 3 months correlation between Simmons and Renasant is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Simmons First National and Renasant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renasant and Simmons First 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 Simmons First National are associated (or correlated) with Renasant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renasant has no effect on the direction of Simmons First i.e., Simmons First and Renasant go up and down completely randomly.

Pair Corralation between Simmons First and Renasant

Given the investment horizon of 90 days Simmons First National is expected to under-perform the Renasant. But the stock apears to be less risky and, when comparing its historical volatility, Simmons First National is 1.13 times less risky than Renasant. The stock trades about -0.07 of its potential returns per unit of risk. The Renasant is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  3,551  in Renasant on December 29, 2024 and sell it today you would lose (179.00) from holding Renasant or give up 5.04% of portfolio value over 90 days.

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

Simmons First National  vs.  Renasant

Simmons First National

Risk-Adjusted Performance

Very Weak

Over the last 90 days Simmons First National has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Renasant

Risk-Adjusted Performance

Very Weak

Over the last 90 days Renasant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Renasant is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Simmons First and Renasant

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

The idea behind Simmons First National and Renasant 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..