Correlation Between Grand River and Oxford Bank
Can any of the company-specific risk be diversified away by investing in both Grand River and Oxford Bank 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 Grand River and Oxford Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grand River Commerce and Oxford Bank, you can compare the effects of market volatilities on Grand River and Oxford Bank 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 Grand River with a short position of Oxford Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand River and Oxford Bank.
Diversification Opportunities for Grand River and Oxford Bank
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Grand and Oxford is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Grand River Commerce and Oxford Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oxford Bank and Grand River 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 Grand River Commerce are associated (or correlated) with Oxford Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oxford Bank has no effect on the direction of Grand River i.e., Grand River and Oxford Bank go up and down completely randomly.
Pair Corralation between Grand River and Oxford Bank
Given the investment horizon of 90 days Grand River is expected to generate 1.37 times less return on investment than Oxford Bank. In addition to that, Grand River is 4.78 times more volatile than Oxford Bank. It trades about 0.03 of its total potential returns per unit of risk. Oxford Bank is currently generating about 0.17 per unit of volatility. If you would invest 3,263 in Oxford Bank on August 29, 2024 and sell it today you would earn a total of 87.00 from holding Oxford Bank or generate 2.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Grand River Commerce vs. Oxford Bank
Performance |
| Timeline |
| Grand River Commerce |
| Oxford Bank |
Grand River and Oxford Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grand River and Oxford Bank
The main advantage of trading using opposite Grand River and Oxford Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand River position performs unexpectedly, Oxford Bank 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 Oxford Bank will offset losses from the drop in Oxford Bank's long position.| Grand River vs. FS Bancorp | Grand River vs. Eastern Michigan Financial | Grand River vs. Bank of Botetourt | Grand River vs. FNB Inc |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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