Correlation Between Great Southern and First Mid

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

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

Diversification Opportunities for Great Southern and First Mid

0.95

Correlation Coefficient

Great Southern  First Mid

Almost no diversification

The 3 months correlation between Great and First is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Great Southern Bancorp and First Mid Illinois in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Mid Illinois and Great Southern 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 Great Southern Bancorp are associated (or correlated) with First Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Mid Illinois has no effect on the direction of Great Southern i.e., Great Southern and First Mid go up and down completely randomly.

Pair Corralation between Great Southern and First Mid

Given the investment horizon of 90 days Great Southern Bancorp is expected to generate 1.07 times more return on investment than First Mid. However, Great Southern is 1.07 times more volatile than First Mid Illinois. It trades about 0.07 of its potential returns per unit of risk. First Mid Illinois is currently generating about 0.05 per unit of risk. If you would invest  5,824  in Great Southern Bancorp on September 2, 2024 and sell it today you would earn a total of  583.00  from holding Great Southern Bancorp or generate 10.01% return on investment over 90 days.

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

Great Southern Bancorp  vs.  First Mid Illinois

Great Southern Bancorp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Great Southern Bancorp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent fundamental drivers, Great Southern may actually be approaching a critical reversion point that can send shares even higher in January 2025.

First Mid Illinois

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First Mid Illinois are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady fundamental drivers, First Mid may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Great Southern and First Mid

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

The idea behind Great Southern Bancorp and First Mid Illinois 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.