Correlation Between Independent Bank and ServisFirst Bancshares

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

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

Diversification Opportunities for Independent Bank and ServisFirst Bancshares

0.94

Correlation Coefficient

Independent Bank  ServisFirst Bancshares

Almost no diversification

The 3 months correlation between Independent and ServisFirst is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Independent Bank and ServisFirst Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ServisFirst Bancshares and Independent Bank 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 Independent Bank 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 Independent Bank i.e., Independent Bank and ServisFirst Bancshares go up and down completely randomly.

Pair Corralation between Independent Bank and ServisFirst Bancshares

Given the investment horizon of 90 days Independent Bank is expected to generate 1.1 times more return on investment than ServisFirst Bancshares. However, Independent Bank is 1.1 times more volatile than ServisFirst Bancshares. It trades about 0.12 of its potential returns per unit of risk. ServisFirst Bancshares is currently generating about 0.1 per unit of risk. If you would invest  6,205  in Independent Bank on June 23, 2025 and sell it today you would earn a total of  908.00  from holding Independent Bank or generate 14.63% return on investment over 90 days.

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

Independent Bank  vs.  ServisFirst Bancshares

Independent Bank

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Independent Bank are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental indicators, Independent Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

ServisFirst Bancshares

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in ServisFirst Bancshares are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental drivers, ServisFirst Bancshares may actually be approaching a critical reversion point that can send shares even higher in October 2025.

Pair Trading with Independent Bank and ServisFirst Bancshares

The main advantage of trading using opposite Independent Bank and ServisFirst Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Independent Bank 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 Independent Bank 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.