Correlation Between Ames National and Orange County
Can any of the company-specific risk be diversified away by investing in both Ames National and Orange County 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 Ames National and Orange County into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ames National and Orange County Bancorp, you can compare the effects of market volatilities on Ames National and Orange County 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 Ames National with a short position of Orange County. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ames National and Orange County.
Diversification Opportunities for Ames National and Orange County
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ames and Orange is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Ames National and Orange County Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orange County Bancorp and Ames National 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 Ames National are associated (or correlated) with Orange County. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orange County Bancorp has no effect on the direction of Ames National i.e., Ames National and Orange County go up and down completely randomly.
Pair Corralation between Ames National and Orange County
Given the investment horizon of 90 days Ames National is expected to under-perform the Orange County. But the stock apears to be less risky and, when comparing its historical volatility, Ames National is 1.58 times less risky than Orange County. The stock trades about -0.02 of its potential returns per unit of risk. The Orange County Bancorp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4,867 in Orange County Bancorp on August 25, 2024 and sell it today you would earn a total of 1,083 from holding Orange County Bancorp or generate 22.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ames National vs. Orange County Bancorp
Performance |
| Timeline |
| Ames National |
| Orange County Bancorp |
Ames National and Orange County Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ames National and Orange County
The main advantage of trading using opposite Ames National and Orange County positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ames National position performs unexpectedly, Orange County 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 Orange County will offset losses from the drop in Orange County's long position.| Ames National vs. First Community | Ames National vs. Old Point Financial | Ames National vs. Oak Valley Bancorp | Ames National vs. Chemung Financial Corp |
| Orange County vs. Southern States Bancshares | Orange County vs. US Century Bank | Orange County vs. Third Coast Bancshares | Orange County vs. Esquire Financial Holdings |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |