Correlation Between NSTS Bancorp and Southern Michigan

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

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

Diversification Opportunities for NSTS Bancorp and Southern Michigan

-0.73

Correlation Coefficient

NSTS Bancorp  Southern Michigan

Pay attention - limited upside

The 3 months correlation between NSTS and Southern is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding NSTS Bancorp and Southern Michigan Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Michigan Bancorp and NSTS 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 NSTS Bancorp are associated (or correlated) with Southern Michigan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Michigan Bancorp has no effect on the direction of NSTS Bancorp i.e., NSTS Bancorp and Southern Michigan go up and down completely randomly.

Pair Corralation between NSTS Bancorp and Southern Michigan

Given the investment horizon of 90 days NSTS Bancorp is expected to under-perform the Southern Michigan. But the stock apears to be less risky and, when comparing its historical volatility, NSTS Bancorp is 1.3 times less risky than Southern Michigan. The stock trades about -0.19 of its potential returns per unit of risk. The Southern Michigan Bancorp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,345  in Southern Michigan Bancorp on July 25, 2025 and sell it today you would earn a total of  148.00  from holding Southern Michigan Bancorp or generate 6.31% return on investment over 90 days.

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

NSTS Bancorp  vs.  Southern Michigan Bancorp

NSTS Bancorp

Risk-Adjusted Performance

Weakest

Over the last 90 days NSTS Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Southern Michigan Bancorp

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Southern Michigan Bancorp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain primary indicators, Southern Michigan may actually be approaching a critical reversion point that can send shares even higher in November 2025.

Pair Trading with NSTS Bancorp and Southern Michigan

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

The idea behind NSTS Bancorp and Southern Michigan 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.