Correlation Between South Plains and Western New
Can any of the company-specific risk be diversified away by investing in both South Plains and Western New 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 South Plains and Western New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between South Plains Financial and Western New England, you can compare the effects of market volatilities on South Plains and Western New 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 South Plains with a short position of Western New. Check out your portfolio center. Please also check ongoing floating volatility patterns of South Plains and Western New.
Diversification Opportunities for South Plains and Western New
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between South and Western is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding South Plains Financial and Western New England in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western New England and South Plains 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 South Plains Financial are associated (or correlated) with Western New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western New England has no effect on the direction of South Plains i.e., South Plains and Western New go up and down completely randomly.
Pair Corralation between South Plains and Western New
Given the investment horizon of 90 days South Plains Financial is expected to under-perform the Western New. In addition to that, South Plains is 1.03 times more volatile than Western New England. It trades about -0.03 of its total potential returns per unit of risk. Western New England is currently generating about 0.07 per unit of volatility. If you would invest 923.00 in Western New England on December 5, 2024 and sell it today you would earn a total of 17.00 from holding Western New England or generate 1.84% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
South Plains Financial vs. Western New England
Performance |
Timeline |
South Plains Financial |
Western New England |
South Plains and Western New Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with South Plains and Western New
The main advantage of trading using opposite South Plains and Western New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if South Plains position performs unexpectedly, Western New 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 Western New will offset losses from the drop in Western New's long position.South Plains vs. Sound Financial Bancorp | South Plains vs. Finward Bancorp | South Plains vs. Franklin Financial Services | South Plains vs. Community West Bancshares |
Western New vs. IF Bancorp | Western New vs. Shore Bancshares | Western New vs. Colony Bankcorp | Western New vs. Investar Holding Corp |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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