Correlation Between Oak Ridge and First Reliance
Can any of the company-specific risk be diversified away by investing in both Oak Ridge and First Reliance 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 Oak Ridge and First Reliance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oak Ridge Financial and First Reliance Bancshares, you can compare the effects of market volatilities on Oak Ridge and First Reliance 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 Oak Ridge with a short position of First Reliance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oak Ridge and First Reliance.
Diversification Opportunities for Oak Ridge and First Reliance
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Oak and First is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Oak Ridge Financial and First Reliance Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Reliance Bancshares and Oak Ridge 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 Oak Ridge Financial are associated (or correlated) with First Reliance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Reliance Bancshares has no effect on the direction of Oak Ridge i.e., Oak Ridge and First Reliance go up and down completely randomly.
Pair Corralation between Oak Ridge and First Reliance
Given the investment horizon of 90 days Oak Ridge Financial is expected to generate 1.23 times more return on investment than First Reliance. However, Oak Ridge is 1.23 times more volatile than First Reliance Bancshares. It trades about 0.02 of its potential returns per unit of risk. First Reliance Bancshares is currently generating about 0.02 per unit of risk. If you would invest 1,875 in Oak Ridge Financial on August 29, 2024 and sell it today you would earn a total of 185.00 from holding Oak Ridge Financial or generate 9.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 82.06% |
| Values | Daily Returns |
Oak Ridge Financial vs. First Reliance Bancshares
Performance |
| Timeline |
| Oak Ridge Financial |
| First Reliance Bancshares |
Oak Ridge and First Reliance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oak Ridge and First Reliance
The main advantage of trading using opposite Oak Ridge and First Reliance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oak Ridge position performs unexpectedly, First Reliance 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 First Reliance will offset losses from the drop in First Reliance's long position.| Oak Ridge vs. Invesco High Income | Oak Ridge vs. Blackrock Muniholdings Ny | Oak Ridge vs. Nuveen California Select | Oak Ridge vs. MFS Investment Grade |
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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