Correlation Between Bank7 Corp and Oak Valley

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Can any of the company-specific risk be diversified away by investing in both Bank7 Corp and Oak Valley 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 Oak Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank7 Corp and Oak Valley Bancorp, you can compare the effects of market volatilities on Bank7 Corp and Oak Valley 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 Oak Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank7 Corp and Oak Valley.

Diversification Opportunities for Bank7 Corp and Oak Valley

0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between Bank7 and Oak is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Bank7 Corp and Oak Valley Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oak Valley 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 Oak Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oak Valley Bancorp has no effect on the direction of Bank7 Corp i.e., Bank7 Corp and Oak Valley go up and down completely randomly.

Pair Corralation between Bank7 Corp and Oak Valley

Given the investment horizon of 90 days Bank7 Corp is expected to generate 1.05 times more return on investment than Oak Valley. However, Bank7 Corp is 1.05 times more volatile than Oak Valley Bancorp. It trades about 0.05 of its potential returns per unit of risk. Oak Valley Bancorp is currently generating about 0.01 per unit of risk. If you would invest  2,817  in Bank7 Corp on November 5, 2024 and sell it today you would earn a total of  1,479  from holding Bank7 Corp or generate 52.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Bank7 Corp  vs.  Oak Valley Bancorp

 Performance 
       Timeline  
Bank7 Corp 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Bank7 Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Bank7 Corp is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.
Oak Valley Bancorp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Oak Valley Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Bank7 Corp and Oak Valley Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bank7 Corp and Oak Valley

The main advantage of trading using opposite Bank7 Corp and Oak Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank7 Corp position performs unexpectedly, Oak Valley 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 Oak Valley will offset losses from the drop in Oak Valley's long position.
The idea behind Bank7 Corp and Oak Valley Bancorp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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