Correlation Between Stock Yards and Simmons First
Can any of the company-specific risk be diversified away by investing in both Stock Yards and Simmons First 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 Stock Yards and Simmons First into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stock Yards Bancorp and Simmons First National, you can compare the effects of market volatilities on Stock Yards and Simmons First 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 Stock Yards with a short position of Simmons First. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stock Yards and Simmons First.
Diversification Opportunities for Stock Yards and Simmons First
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Stock and Simmons is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Stock Yards Bancorp and Simmons First National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simmons First National and Stock Yards 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 Stock Yards Bancorp are associated (or correlated) with Simmons First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simmons First National has no effect on the direction of Stock Yards i.e., Stock Yards and Simmons First go up and down completely randomly.
Pair Corralation between Stock Yards and Simmons First
Given the investment horizon of 90 days Stock Yards Bancorp is expected to generate 1.18 times more return on investment than Simmons First. However, Stock Yards is 1.18 times more volatile than Simmons First National. It trades about -0.05 of its potential returns per unit of risk. Simmons First National is currently generating about -0.1 per unit of risk. If you would invest 7,708 in Stock Yards Bancorp on December 3, 2024 and sell it today you would lose (422.00) from holding Stock Yards Bancorp or give up 5.47% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Stock Yards Bancorp vs. Simmons First National
Performance |
Timeline |
Stock Yards Bancorp |
Simmons First National |
Stock Yards and Simmons First Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Stock Yards and Simmons First
The main advantage of trading using opposite Stock Yards and Simmons First positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stock Yards position performs unexpectedly, Simmons First 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 Simmons First will offset losses from the drop in Simmons First's long position.Stock Yards vs. First National Corp | Stock Yards vs. Southern Missouri Bancorp | Stock Yards vs. Shore Bancshares | Stock Yards vs. First Capital |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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