Correlation Between United Community and Southern First

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

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

Diversification Opportunities for United Community and Southern First

0.14

Correlation Coefficient

United Community  Southern First

Average diversification

The 3 months correlation between United and Southern is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding United Community Banks and Southern First Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern First Bancshares and United Community 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 United Community Banks are associated (or correlated) with Southern First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern First Bancshares has no effect on the direction of United Community i.e., United Community and Southern First go up and down completely randomly.

Pair Corralation between United Community and Southern First

If you would invest  3,414  in Southern First Bancshares on October 10, 2024 and sell it today you would earn a total of  174.00  from holding Southern First Bancshares or generate 5.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

United Community Banks  vs.  Southern First Bancshares

United Community Banks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Community Banks has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, United Community is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Southern First Bancshares

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Southern First Bancshares are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Southern First may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with United Community and Southern First

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

The idea behind United Community Banks and Southern First Bancshares 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.