Correlation Between ServisFirst Bancshares and Texas Capital

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

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

Diversification Opportunities for ServisFirst Bancshares and Texas Capital

0.94

Correlation Coefficient

ServisFirst Bancshares  Texas Capital

Almost no diversification

The 3 months correlation between ServisFirst and Texas is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding ServisFirst Bancshares and Texas Capital Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Capital Bancshares 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 Texas Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Capital Bancshares has no effect on the direction of ServisFirst Bancshares i.e., ServisFirst Bancshares and Texas Capital go up and down completely randomly.

Pair Corralation between ServisFirst Bancshares and Texas Capital

Given the investment horizon of 90 days ServisFirst Bancshares is expected to generate 3.76 times less return on investment than Texas Capital. But when comparing it to its historical volatility, ServisFirst Bancshares is 1.07 times less risky than Texas Capital. It trades about 0.01 of its potential returns per unit of risk. Texas Capital Bancshares is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  7,619  in Texas Capital Bancshares on May 14, 2025 and sell it today you would earn a total of  327.00  from holding Texas Capital Bancshares or generate 4.29% 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.  Texas Capital Bancshares

ServisFirst Bancshares

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ServisFirst Bancshares are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Texas Capital Bancshares

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Texas Capital Bancshares are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental drivers, Texas Capital is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with ServisFirst Bancshares and Texas Capital

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

The idea behind ServisFirst Bancshares and Texas Capital 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.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.