Correlation Between TC Bancshares and Great Southern

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

By analyzing existing cross correlation between TC Bancshares and Great Southern Bancorp, you can compare the effects of market volatilities on TC Bancshares and Great Southern 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 TC Bancshares with a short position of Great Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of TC Bancshares and Great Southern.

Diversification Opportunities for TC Bancshares and Great Southern

-0.29

Correlation Coefficient

TC Bancshares  Great Southern

Very good diversification

The 3 months correlation between TCBC and Great is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding TC Bancshares and Great Southern Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Southern Bancorp and TC Bancshares 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 TC Bancshares are associated (or correlated) with Great Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Southern Bancorp has no effect on the direction of TC Bancshares i.e., TC Bancshares and Great Southern go up and down completely randomly.

Pair Corralation between TC Bancshares and Great Southern

Given the investment horizon of 90 days TC Bancshares is expected to under-perform the Great Southern. But the stock apears to be less risky and, when comparing its historical volatility, TC Bancshares is 1.17 times less risky than Great Southern. The stock trades about -0.01 of its potential returns per unit of risk. The Great Southern Bancorp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  5,646  in Great Southern Bancorp on September 20, 2024 and sell it today you would earn a total of  534.00  from holding Great Southern Bancorp or generate 9.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	81.01%
Values	Daily Returns

TC Bancshares  vs.  Great Southern Bancorp

TC Bancshares

Risk-Adjusted Performance

0 of 100

Very Weak

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

Great Southern Bancorp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Great Southern Bancorp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental drivers, Great Southern may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with TC Bancshares and Great Southern

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

The idea behind TC Bancshares and Great Southern Bancorp 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 Transaction History module to view history of all your transactions and understand their impact on performance.