Correlation Between Oak Ridge and SPACE
Can any of the company-specific risk be diversified away by investing in both Oak Ridge and SPACE 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 SPACE 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 SPACE, you can compare the effects of market volatilities on Oak Ridge and SPACE 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 SPACE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oak Ridge and SPACE.
Diversification Opportunities for Oak Ridge and SPACE
Very poor diversification
The 3 months correlation between Oak and SPACE is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Oak Ridge Financial and SPACE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPACE 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 SPACE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPACE has no effect on the direction of Oak Ridge i.e., Oak Ridge and SPACE go up and down completely randomly.
Pair Corralation between Oak Ridge and SPACE
Given the investment horizon of 90 days Oak Ridge is expected to generate 525.7 times less return on investment than SPACE. But when comparing it to its historical volatility, Oak Ridge Financial is 76.39 times less risky than SPACE. It trades about 0.03 of its potential returns per unit of risk. SPACE is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 0.00 in SPACE on September 1, 2024 and sell it today you would earn a total of 59.00 from holding SPACE or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 75.18% |
| Values | Daily Returns |
Oak Ridge Financial vs. SPACE
Performance |
| Timeline |
| Oak Ridge Financial |
| SPACE |
Oak Ridge and SPACE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oak Ridge and SPACE
The main advantage of trading using opposite Oak Ridge and SPACE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oak Ridge position performs unexpectedly, SPACE 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 SPACE will offset losses from the drop in SPACE's long position.| Oak Ridge vs. HUMANA INC | Oak Ridge vs. SCOR PK | Oak Ridge vs. Aquagold International | Oak Ridge vs. Thrivent High Yield |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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