Correlation Between Southern California and Ohio Valley
Can any of the company-specific risk be diversified away by investing in both Southern California and Ohio Valley 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 Southern California and Ohio Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern California Bancorp and Ohio Valley Banc, you can compare the effects of market volatilities on Southern California and Ohio Valley 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 Southern California with a short position of Ohio Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern California and Ohio Valley.
Diversification Opportunities for Southern California and Ohio Valley
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Southern and Ohio is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Southern California Bancorp and Ohio Valley Banc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ohio Valley Banc and Southern California 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 Southern California Bancorp are associated (or correlated) with Ohio Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ohio Valley Banc has no effect on the direction of Southern California i.e., Southern California and Ohio Valley go up and down completely randomly.
Pair Corralation between Southern California and Ohio Valley
Given the investment horizon of 90 days Southern California is expected to generate 69.89 times less return on investment than Ohio Valley. But when comparing it to its historical volatility, Southern California Bancorp is 28.36 times less risky than Ohio Valley. It trades about 0.02 of its potential returns per unit of risk. Ohio Valley Banc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,404 in Ohio Valley Banc on September 3, 2024 and sell it today you would earn a total of 314.00 from holding Ohio Valley Banc or generate 13.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.38% |
| Values | Daily Returns |
Southern California Bancorp vs. Ohio Valley Banc
Performance |
| Timeline |
| Southern California |
| Ohio Valley Banc |
Southern California and Ohio Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern California and Ohio Valley
The main advantage of trading using opposite Southern California and Ohio Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern California position performs unexpectedly, Ohio Valley 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 Ohio Valley will offset losses from the drop in Ohio Valley's long position.| Southern California vs. Avidbank Holdings | Southern California vs. American Riviera Bank | Southern California vs. American Business Bk | Southern California vs. Private Bancorp of |
| Ohio Valley vs. JPMorgan Chase Co | Ohio Valley vs. Citigroup | Ohio Valley vs. Wells Fargo | Ohio Valley vs. Toronto Dominion Bank |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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