Correlation Between ServisFirst Bancshares and Lakeland Financial

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

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

Diversification Opportunities for ServisFirst Bancshares and Lakeland Financial

0.93

Correlation Coefficient

ServisFirst Bancshares  Lakeland Financial

Almost no diversification

The 3 months correlation between ServisFirst and Lakeland is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding ServisFirst Bancshares and Lakeland Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lakeland Financial and ServisFirst Bancshares 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 ServisFirst Bancshares are associated (or correlated) with Lakeland Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lakeland Financial has no effect on the direction of ServisFirst Bancshares i.e., ServisFirst Bancshares and Lakeland Financial go up and down completely randomly.

Pair Corralation between ServisFirst Bancshares and Lakeland Financial

Given the investment horizon of 90 days ServisFirst Bancshares is expected to generate 1.58 times less return on investment than Lakeland Financial. In addition to that, ServisFirst Bancshares is 1.15 times more volatile than Lakeland Financial. It trades about 0.08 of its total potential returns per unit of risk. Lakeland Financial is currently generating about 0.14 per unit of volatility. If you would invest  5,781  in Lakeland Financial on May 2, 2025 and sell it today you would earn a total of  759.00  from holding Lakeland Financial or generate 13.13% return on investment over 90 days.

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

ServisFirst Bancshares  vs.  Lakeland Financial

ServisFirst Bancshares

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ServisFirst Bancshares are ranked lower than 6 (%) 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 August 2025.

Lakeland Financial

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lakeland Financial are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, Lakeland Financial displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ServisFirst Bancshares and Lakeland Financial

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

The idea behind ServisFirst Bancshares and Lakeland 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.