Correlation Between Bank7 Corp and Orange County
Can any of the company-specific risk be diversified away by investing in both Bank7 Corp and Orange County 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 Bank7 Corp and Orange County into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank7 Corp and Orange County Bancorp, you can compare the effects of market volatilities on Bank7 Corp and Orange County 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 Bank7 Corp with a short position of Orange County. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank7 Corp and Orange County.
Diversification Opportunities for Bank7 Corp and Orange County
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank7 and Orange is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Bank7 Corp and Orange County Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orange County Bancorp and Bank7 Corp 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 Bank7 Corp are associated (or correlated) with Orange County. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orange County Bancorp has no effect on the direction of Bank7 Corp i.e., Bank7 Corp and Orange County go up and down completely randomly.
Pair Corralation between Bank7 Corp and Orange County
Given the investment horizon of 90 days Bank7 Corp is expected to generate 0.68 times more return on investment than Orange County. However, Bank7 Corp is 1.47 times less risky than Orange County. It trades about 0.06 of its potential returns per unit of risk. Orange County Bancorp is currently generating about 0.03 per unit of risk. If you would invest 2,857 in Bank7 Corp on September 1, 2024 and sell it today you would earn a total of 1,909 from holding Bank7 Corp or generate 66.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank7 Corp vs. Orange County Bancorp
Performance |
| Timeline |
| Bank7 Corp |
| Orange County Bancorp |
Bank7 Corp and Orange County Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank7 Corp and Orange County
The main advantage of trading using opposite Bank7 Corp and Orange County positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank7 Corp position performs unexpectedly, Orange County 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 Orange County will offset losses from the drop in Orange County's long position.| Bank7 Corp vs. Home Federal Bancorp | Bank7 Corp vs. First Financial Northwest | Bank7 Corp vs. First Northwest Bancorp | Bank7 Corp vs. First Capital |
| Orange County vs. Southern States Bancshares | Orange County vs. US Century Bank | Orange County vs. Third Coast Bancshares | Orange County vs. Esquire Financial Holdings |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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