Correlation Between WSFS Financial and ServisFirst Bancshares

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

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

Diversification Opportunities for WSFS Financial and ServisFirst Bancshares

0.94

Correlation Coefficient

WSFS Financial  ServisFirst Bancshares

Almost no diversification

The 3 months correlation between WSFS and ServisFirst is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding WSFS Financial and ServisFirst Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ServisFirst Bancshares and WSFS Financial 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 WSFS Financial are associated (or correlated) with ServisFirst Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ServisFirst Bancshares has no effect on the direction of WSFS Financial i.e., WSFS Financial and ServisFirst Bancshares go up and down completely randomly.

Pair Corralation between WSFS Financial and ServisFirst Bancshares

Given the investment horizon of 90 days WSFS Financial is expected to generate 1.19 times more return on investment than ServisFirst Bancshares. However, WSFS Financial is 1.19 times more volatile than ServisFirst Bancshares. It trades about 0.06 of its potential returns per unit of risk. ServisFirst Bancshares is currently generating about 0.03 per unit of risk. If you would invest  4,987  in WSFS Financial on October 26, 2024 and sell it today you would earn a total of  365.00  from holding WSFS Financial or generate 7.32% return on investment over 90 days.

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

WSFS Financial  vs.  ServisFirst Bancshares

WSFS Financial

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WSFS Financial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, WSFS Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ServisFirst Bancshares

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ServisFirst Bancshares are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, ServisFirst Bancshares is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with WSFS Financial and ServisFirst Bancshares

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

The idea behind WSFS Financial and ServisFirst 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.