Correlation Between Oak Ridge and Patriot National
Can any of the company-specific risk be diversified away by investing in both Oak Ridge and Patriot National 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 Patriot National 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 Patriot National Bancorp, you can compare the effects of market volatilities on Oak Ridge and Patriot National 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 Patriot National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oak Ridge and Patriot National.
Diversification Opportunities for Oak Ridge and Patriot National
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Oak and Patriot is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Oak Ridge Financial and Patriot National Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patriot National Bancorp 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 Patriot National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patriot National Bancorp has no effect on the direction of Oak Ridge i.e., Oak Ridge and Patriot National go up and down completely randomly.
Pair Corralation between Oak Ridge and Patriot National
Given the investment horizon of 90 days Oak Ridge Financial is expected to generate 0.22 times more return on investment than Patriot National. However, Oak Ridge Financial is 4.47 times less risky than Patriot National. It trades about 0.09 of its potential returns per unit of risk. Patriot National Bancorp is currently generating about -0.02 per unit of risk. If you would invest 1,721 in Oak Ridge Financial on September 3, 2024 and sell it today you would earn a total of 354.00 from holding Oak Ridge Financial or generate 20.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.12% |
| Values | Daily Returns |
Oak Ridge Financial vs. Patriot National Bancorp
Performance |
| Timeline |
| Oak Ridge Financial |
| Patriot National Bancorp |
Oak Ridge and Patriot National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oak Ridge and Patriot National
The main advantage of trading using opposite Oak Ridge and Patriot National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oak Ridge position performs unexpectedly, Patriot National 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 Patriot National will offset losses from the drop in Patriot National'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 |
| Patriot National vs. Citizens Bancorp Investment | Patriot National vs. First Keystone Corp | Patriot National vs. Greenville Federal Financial | Patriot National vs. Oak Ridge Financial |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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