Correlation Between Northrim BanCorp and Southern Missouri

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

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

Diversification Opportunities for Northrim BanCorp and Southern Missouri

0.68

Correlation Coefficient

Northrim BanCorp  Southern Missouri

Poor diversification

The 3 months correlation between Northrim and Southern is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Northrim BanCorp and Southern Missouri Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Missouri Bancorp and Northrim 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 Northrim BanCorp are associated (or correlated) with Southern Missouri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Missouri Bancorp has no effect on the direction of Northrim BanCorp i.e., Northrim BanCorp and Southern Missouri go up and down completely randomly.

Pair Corralation between Northrim BanCorp and Southern Missouri

Given the investment horizon of 90 days Northrim BanCorp is expected to under-perform the Southern Missouri. In addition to that, Northrim BanCorp is 1.22 times more volatile than Southern Missouri Bancorp. It trades about -0.01 of its total potential returns per unit of risk. Southern Missouri Bancorp is currently generating about 0.03 per unit of volatility. If you would invest  5,224  in Southern Missouri Bancorp on May 7, 2025 and sell it today you would earn a total of  95.00  from holding Southern Missouri Bancorp or generate 1.82% return on investment over 90 days.

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

Northrim BanCorp  vs.  Southern Missouri Bancorp

Northrim BanCorp

Risk-Adjusted Performance

Weakest

Over the last 90 days Northrim BanCorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Northrim BanCorp is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Southern Missouri Bancorp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Southern Missouri Bancorp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, Southern Missouri is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Northrim BanCorp and Southern Missouri

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

The idea behind Northrim BanCorp and Southern Missouri 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.