Correlation Between Great Southern and Waterstone Financial

Can any of the company-specific risk be diversified away by investing in both Great Southern and Waterstone Financial 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 Waterstone Financial 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 Waterstone Financial, you can compare the effects of market volatilities on Great Southern and Waterstone Financial 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 Waterstone Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Southern and Waterstone Financial.

Diversification Opportunities for Great Southern and Waterstone Financial

0.67

Correlation Coefficient

Great Southern  Waterstone Financial

Poor diversification

The 3 months correlation between Great and Waterstone is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Great Southern Bancorp and Waterstone Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waterstone Financial 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 Waterstone Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waterstone Financial has no effect on the direction of Great Southern i.e., Great Southern and Waterstone Financial go up and down completely randomly.

Pair Corralation between Great Southern and Waterstone Financial

Given the investment horizon of 90 days Great Southern is expected to generate 6.36 times less return on investment than Waterstone Financial. In addition to that, Great Southern is 1.28 times more volatile than Waterstone Financial. It trades about 0.02 of its total potential returns per unit of risk. Waterstone Financial is currently generating about 0.12 per unit of volatility. If you would invest  1,213  in Waterstone Financial on May 7, 2025 and sell it today you would earn a total of  119.00  from holding Waterstone Financial or generate 9.81% return on investment over 90 days.

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

Great Southern Bancorp  vs.  Waterstone Financial

Great Southern Bancorp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Great Southern Bancorp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, Great Southern is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Waterstone Financial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Waterstone Financial are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting fundamental drivers, Waterstone Financial may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Great Southern and Waterstone Financial

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

The idea behind Great Southern Bancorp and Waterstone Financial 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.