Correlation Between First Reliance and Oak Ridge
Can any of the company-specific risk be diversified away by investing in both First Reliance and Oak Ridge 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 First Reliance and Oak Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Reliance Bancshares and Oak Ridge Financial, you can compare the effects of market volatilities on First Reliance and Oak Ridge 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 First Reliance with a short position of Oak Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Reliance and Oak Ridge.
Diversification Opportunities for First Reliance and Oak Ridge
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Oak is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding First Reliance Bancshares and Oak Ridge Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oak Ridge Financial and First Reliance 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 First Reliance Bancshares are associated (or correlated) with Oak Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oak Ridge Financial has no effect on the direction of First Reliance i.e., First Reliance and Oak Ridge go up and down completely randomly.
Pair Corralation between First Reliance and Oak Ridge
Given the investment horizon of 90 days First Reliance is expected to generate 1.09 times less return on investment than Oak Ridge. But when comparing it to its historical volatility, First Reliance Bancshares is 1.45 times less risky than Oak Ridge. It trades about 0.16 of its potential returns per unit of risk. Oak Ridge Financial is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,674 in Oak Ridge Financial on August 29, 2024 and sell it today you would earn a total of 386.00 from holding Oak Ridge Financial or generate 23.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Reliance Bancshares vs. Oak Ridge Financial
Performance |
| Timeline |
| First Reliance Bancshares |
| Oak Ridge Financial |
First Reliance and Oak Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Reliance and Oak Ridge
The main advantage of trading using opposite First Reliance and Oak Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Reliance position performs unexpectedly, Oak Ridge 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 Ridge will offset losses from the drop in Oak Ridge's long position.| First Reliance vs. Israel Discount Bank | First Reliance vs. Baraboo Bancorporation | First Reliance vs. Danske Bank AS | First Reliance vs. Jyske Bank AS |
| Oak Ridge vs. Invesco High Income | Oak Ridge vs. Blackrock Muniholdings Ny | Oak Ridge vs. Nuveen California Select | Oak Ridge vs. MFS Investment Grade |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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