Correlation Between Mainstreet Bank and Oak Valley
Can any of the company-specific risk be diversified away by investing in both Mainstreet Bank 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 Mainstreet Bank and Oak Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mainstreet Bank and Oak Valley Bancorp, you can compare the effects of market volatilities on Mainstreet Bank 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 Mainstreet Bank with a short position of Oak Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstreet Bank and Oak Valley.
Diversification Opportunities for Mainstreet Bank and Oak Valley
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Mainstreet and Oak is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Mainstreet Bank 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 Mainstreet Bank 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 Mainstreet Bank 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 Mainstreet Bank i.e., Mainstreet Bank and Oak Valley go up and down completely randomly.
Pair Corralation between Mainstreet Bank and Oak Valley
Given the investment horizon of 90 days Mainstreet Bank is expected to under-perform the Oak Valley. In addition to that, Mainstreet Bank is 1.09 times more volatile than Oak Valley Bancorp. It trades about -0.01 of its total potential returns per unit of risk. Oak Valley Bancorp is currently generating about 0.04 per unit of volatility. If you would invest 2,419 in Oak Valley Bancorp on August 28, 2024 and sell it today you would earn a total of 721.00 from holding Oak Valley Bancorp or generate 29.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mainstreet Bank vs. Oak Valley Bancorp
Performance |
| Timeline |
| Mainstreet Bank |
| Oak Valley Bancorp |
Mainstreet Bank and Oak Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mainstreet Bank and Oak Valley
The main advantage of trading using opposite Mainstreet Bank and Oak Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstreet Bank 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.| Mainstreet Bank vs. Oak Valley Bancorp | Mainstreet Bank vs. Home Federal Bancorp | Mainstreet Bank vs. LINKBANCORP | Mainstreet Bank vs. First Northwest Bancorp |
| 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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