Correlation Between ESSA Bancorp and Oak Valley
Can any of the company-specific risk be diversified away by investing in both ESSA Bancorp 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 ESSA Bancorp and Oak Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESSA Bancorp and Oak Valley Bancorp, you can compare the effects of market volatilities on ESSA Bancorp 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 ESSA Bancorp with a short position of Oak Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESSA Bancorp and Oak Valley.
Diversification Opportunities for ESSA Bancorp and Oak Valley
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ESSA and Oak is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding ESSA Bancorp 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 ESSA Bancorp 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 ESSA Bancorp 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 ESSA Bancorp i.e., ESSA Bancorp and Oak Valley go up and down completely randomly.
Pair Corralation between ESSA Bancorp and Oak Valley
Given the investment horizon of 90 days ESSA Bancorp is expected to generate 1.04 times more return on investment than Oak Valley. However, ESSA Bancorp is 1.04 times more volatile than Oak Valley Bancorp. It trades about 0.02 of its potential returns per unit of risk. Oak Valley Bancorp is currently generating about 0.02 per unit of risk. If you would invest 1,952 in ESSA Bancorp on August 25, 2024 and sell it today you would earn a total of 78.00 from holding ESSA Bancorp or generate 4.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ESSA Bancorp vs. Oak Valley Bancorp
Performance |
| Timeline |
| ESSA Bancorp |
| Oak Valley Bancorp |
ESSA Bancorp and Oak Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESSA Bancorp and Oak Valley
The main advantage of trading using opposite ESSA Bancorp and Oak Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESSA Bancorp 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.| ESSA Bancorp vs. Fifth Third Bancorp | ESSA Bancorp vs. Zions Bancorporation | ESSA Bancorp vs. Huntington Bancshares Incorporated | ESSA Bancorp vs. PNC Financial Services |
| Oak Valley vs. Home Federal Bancorp | Oak Valley vs. Lake Shore Bancorp | Oak Valley vs. Community West Bancshares | Oak Valley vs. Magyar 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |