Correlation Between Postal Savings and ServisFirst Bancshares

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

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

Diversification Opportunities for Postal Savings and ServisFirst Bancshares

0.62

Correlation Coefficient

Postal Savings  ServisFirst Bancshares

Poor diversification

The 3 months correlation between Postal and ServisFirst is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Postal Savings Bank and ServisFirst Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ServisFirst Bancshares and Postal Savings 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 Postal Savings Bank are associated (or correlated) with ServisFirst Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ServisFirst Bancshares has no effect on the direction of Postal Savings i.e., Postal Savings and ServisFirst Bancshares go up and down completely randomly.

Pair Corralation between Postal Savings and ServisFirst Bancshares

Assuming the 90 days trading horizon Postal Savings Bank is expected to generate 0.68 times more return on investment than ServisFirst Bancshares. However, Postal Savings Bank is 1.48 times less risky than ServisFirst Bancshares. It trades about -0.14 of its potential returns per unit of risk. ServisFirst Bancshares is currently generating about -0.1 per unit of risk. If you would invest  625.00  in Postal Savings Bank on September 9, 2025 and sell it today you would lose (68.00) from holding Postal Savings Bank or give up 10.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	92.31%
Values	Daily Returns

Postal Savings Bank  vs.  ServisFirst Bancshares

Postal Savings Bank

Risk-Adjusted Performance

Weakest

Over the last 90 days Postal Savings Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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 latest conflicting performance, the Stock's fundamental drivers remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Postal Savings and ServisFirst Bancshares

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

The idea behind Postal Savings Bank and ServisFirst 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 Global Correlations module to find global opportunities by holding instruments from different markets.