Correlation Between IF Bancorp and Great Southern

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

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

Diversification Opportunities for IF Bancorp and Great Southern

0.55

Correlation Coefficient

IF Bancorp  Great Southern

Very weak diversification

The 3 months correlation between IROQ and Great is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding IF Bancorp 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 IF Bancorp 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 IF Bancorp 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 IF Bancorp i.e., IF Bancorp and Great Southern go up and down completely randomly.

Pair Corralation between IF Bancorp and Great Southern

Given the investment horizon of 90 days IF Bancorp is expected to generate 0.88 times more return on investment than Great Southern. However, IF Bancorp is 1.14 times less risky than Great Southern. It trades about 0.15 of its potential returns per unit of risk. Great Southern Bancorp is currently generating about 0.08 per unit of risk. If you would invest  1,929  in IF Bancorp on September 5, 2024 and sell it today you would earn a total of  410.00  from holding IF Bancorp or generate 21.25% return on investment over 90 days.

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

IF Bancorp  vs.  Great Southern Bancorp

IF Bancorp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IF Bancorp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, IF Bancorp reported solid returns over the last few months and may actually be approaching a breakup point.

Great Southern Bancorp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Great Southern Bancorp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, Great Southern exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IF Bancorp and Great Southern

The main advantage of trading using opposite IF Bancorp and Great Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IF Bancorp 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 IF Bancorp 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.