Correlation Between Great Southern and Oak Valley
Can any of the company-specific risk be diversified away by investing in both Great Southern 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 Great Southern and Oak Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Southern Bancorp and Oak Valley Bancorp, you can compare the effects of market volatilities on Great Southern 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 Great Southern with a short position of Oak Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Southern and Oak Valley.
Diversification Opportunities for Great Southern and Oak Valley
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Great and Oak is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Great Southern 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 Great Southern 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 Great Southern 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 Great Southern i.e., Great Southern and Oak Valley go up and down completely randomly.
Pair Corralation between Great Southern and Oak Valley
Given the investment horizon of 90 days Great Southern is expected to generate 1.85 times less return on investment than Oak Valley. But when comparing it to its historical volatility, Great Southern Bancorp is 1.07 times less risky than Oak Valley. It trades about 0.02 of its potential returns per unit of risk. Oak Valley Bancorp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,359 in Oak Valley Bancorp on August 28, 2024 and sell it today you would earn a total of 781.00 from holding Oak Valley Bancorp or generate 33.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Southern Bancorp vs. Oak Valley Bancorp
Performance |
| Timeline |
| Great Southern Bancorp |
| Oak Valley Bancorp |
Great Southern and Oak Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Southern and Oak Valley
The main advantage of trading using opposite Great Southern and Oak Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Southern 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.| Great Southern vs. Fifth Third Bancorp | Great Southern vs. Huntington Bancshares Incorporated | Great Southern vs. MT Bank |
| Oak Valley vs. Fifth Third Bancorp | Oak Valley vs. Huntington Bancshares Incorporated | Oak Valley vs. MT Bank |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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