Correlation Between LINKBANCORP and Prosperity Bancshares

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

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

Diversification Opportunities for LINKBANCORP and Prosperity Bancshares

0.69

Correlation Coefficient

LINKBANCORP  Prosperity Bancshares

Poor diversification

The 3 months correlation between LINKBANCORP and Prosperity is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding LINKBANCORP and Prosperity Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosperity Bancshares and LINKBANCORP 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 LINKBANCORP are associated (or correlated) with Prosperity Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosperity Bancshares has no effect on the direction of LINKBANCORP i.e., LINKBANCORP and Prosperity Bancshares go up and down completely randomly.

Pair Corralation between LINKBANCORP and Prosperity Bancshares

Given the investment horizon of 90 days LINKBANCORP is expected to generate 1.44 times more return on investment than Prosperity Bancshares. However, LINKBANCORP is 1.44 times more volatile than Prosperity Bancshares. It trades about 0.04 of its potential returns per unit of risk. Prosperity Bancshares is currently generating about -0.03 per unit of risk. If you would invest  686.00  in LINKBANCORP on May 21, 2025 and sell it today you would earn a total of  29.00  from holding LINKBANCORP or generate 4.23% return on investment over 90 days.

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

LINKBANCORP  vs.  Prosperity Bancshares

LINKBANCORP

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LINKBANCORP are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward-looking signals, LINKBANCORP is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Prosperity Bancshares

Risk-Adjusted Performance

Weakest

Over the last 90 days Prosperity Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Prosperity Bancshares is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with LINKBANCORP and Prosperity Bancshares

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

The idea behind LINKBANCORP and Prosperity 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.

Check out your portfolio center.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.