Correlation Between American Funds and Orrstown Financial
Can any of the company-specific risk be diversified away by investing in both American Funds and Orrstown 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 American Funds and Orrstown Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Fundamental and Orrstown Financial Services, you can compare the effects of market volatilities on American Funds and Orrstown 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 American Funds with a short position of Orrstown Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Orrstown Financial.
Diversification Opportunities for American Funds and Orrstown Financial
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Orrstown is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Fundamental and Orrstown Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orrstown Financial and American Funds 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 American Funds Fundamental are associated (or correlated) with Orrstown Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orrstown Financial has no effect on the direction of American Funds i.e., American Funds and Orrstown Financial go up and down completely randomly.
Pair Corralation between American Funds and Orrstown Financial
Assuming the 90 days horizon American Funds Fundamental is expected to generate 0.75 times more return on investment than Orrstown Financial. However, American Funds Fundamental is 1.34 times less risky than Orrstown Financial. It trades about 0.2 of its potential returns per unit of risk. Orrstown Financial Services is currently generating about 0.05 per unit of risk. If you would invest 8,096 in American Funds Fundamental on November 3, 2024 and sell it today you would earn a total of 322.00 from holding American Funds Fundamental or generate 3.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
American Funds Fundamental vs. Orrstown Financial Services
Performance |
| Timeline |
| American Funds Funda |
| Orrstown Financial |
American Funds and Orrstown Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Orrstown Financial
The main advantage of trading using opposite American Funds and Orrstown Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Orrstown 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 Orrstown Financial will offset losses from the drop in Orrstown Financial's long position.| American Funds vs. Federated Emerging Market | American Funds vs. Siit Emerging Markets | American Funds vs. Mid Cap 15x Strategy | American Funds vs. Ashmore Emerging Markets |
| Orrstown Financial vs. Home Federal Bancorp | Orrstown Financial vs. LINKBANCORP | Orrstown Financial vs. Rhinebeck Bancorp | Orrstown Financial vs. Lake Shore Bancorp |
Check out your portfolio center.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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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