Correlation Between ServisFirst Bancshares and Orthofix Medical

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

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

Diversification Opportunities for ServisFirst Bancshares and Orthofix Medical

-0.05

Correlation Coefficient

ServisFirst Bancshares  Orthofix Medical

Good diversification

The 3 months correlation between ServisFirst and Orthofix is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding ServisFirst Bancshares and Orthofix Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orthofix Medical 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 Orthofix Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orthofix Medical has no effect on the direction of ServisFirst Bancshares i.e., ServisFirst Bancshares and Orthofix Medical go up and down completely randomly.

Pair Corralation between ServisFirst Bancshares and Orthofix Medical

Given the investment horizon of 90 days ServisFirst Bancshares is expected to under-perform the Orthofix Medical. But the stock apears to be less risky and, when comparing its historical volatility, ServisFirst Bancshares is 1.74 times less risky than Orthofix Medical. The stock trades about -0.01 of its potential returns per unit of risk. The Orthofix Medical is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,243  in Orthofix Medical on May 11, 2025 and sell it today you would earn a total of  8.00  from holding Orthofix Medical or generate 0.64% return on investment over 90 days.

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

ServisFirst Bancshares  vs.  Orthofix Medical

ServisFirst Bancshares

Risk-Adjusted Performance

Weakest

Over the last 90 days ServisFirst Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, ServisFirst Bancshares is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Orthofix Medical

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Orthofix Medical are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward indicators, Orthofix Medical is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ServisFirst Bancshares and Orthofix Medical

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

The idea behind ServisFirst Bancshares and Orthofix Medical 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.