Correlation Between Oak Ridge and Norwood Financial
Can any of the company-specific risk be diversified away by investing in both Oak Ridge and Norwood 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 Oak Ridge and Norwood Financial 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 Norwood Financial Corp, you can compare the effects of market volatilities on Oak Ridge and Norwood 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 Oak Ridge with a short position of Norwood Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oak Ridge and Norwood Financial.
Diversification Opportunities for Oak Ridge and Norwood Financial
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Oak and Norwood is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Oak Ridge Financial and Norwood Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norwood Financial Corp 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 Norwood Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norwood Financial Corp has no effect on the direction of Oak Ridge i.e., Oak Ridge and Norwood Financial go up and down completely randomly.
Pair Corralation between Oak Ridge and Norwood Financial
Given the investment horizon of 90 days Oak Ridge Financial is expected to generate 0.41 times more return on investment than Norwood Financial. However, Oak Ridge Financial is 2.41 times less risky than Norwood Financial. It trades about 0.0 of its potential returns per unit of risk. Norwood Financial Corp is currently generating about -0.07 per unit of risk. If you would invest 2,100 in Oak Ridge Financial on November 27, 2024 and sell it today you would earn a total of 0.00 from holding Oak Ridge Financial or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oak Ridge Financial vs. Norwood Financial Corp
Performance |
| Timeline |
| Oak Ridge Financial |
| Norwood Financial Corp |
Oak Ridge and Norwood Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oak Ridge and Norwood Financial
The main advantage of trading using opposite Oak Ridge and Norwood Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oak Ridge position performs unexpectedly, Norwood 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 Norwood Financial will offset losses from the drop in Norwood Financial's long position.| Oak Ridge vs. Citizens Bancorp Investment | Oak Ridge vs. First Keystone Corp | Oak Ridge vs. Greenville Federal Financial | Oak Ridge vs. Main Street Financial |
| Norwood Financial vs. Chemung Financial Corp | Norwood Financial vs. Home Federal Bancorp | Norwood Financial vs. Rhinebeck Bancorp | Norwood Financial vs. Finward 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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