Correlation Between Oak Valley and Banco Del
Can any of the company-specific risk be diversified away by investing in both Oak Valley and Banco Del 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 Oak Valley and Banco Del into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oak Valley Bancorp and Banco del Bajo, you can compare the effects of market volatilities on Oak Valley and Banco Del 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 Oak Valley with a short position of Banco Del. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oak Valley and Banco Del.
Diversification Opportunities for Oak Valley and Banco Del
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Oak and Banco is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Oak Valley Bancorp and Banco del Bajo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco del Bajo and Oak Valley 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 Oak Valley Bancorp are associated (or correlated) with Banco Del. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco del Bajo has no effect on the direction of Oak Valley i.e., Oak Valley and Banco Del go up and down completely randomly.
Pair Corralation between Oak Valley and Banco Del
Given the investment horizon of 90 days Oak Valley Bancorp is expected to under-perform the Banco Del. But the stock apears to be less risky and, when comparing its historical volatility, Oak Valley Bancorp is 2.17 times less risky than Banco Del. The stock trades about -0.19 of its potential returns per unit of risk. The Banco del Bajo is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 224.00 in Banco del Bajo on November 4, 2024 and sell it today you would earn a total of 21.00 from holding Banco del Bajo or generate 9.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 27.5% |
| Values | Daily Returns |
Oak Valley Bancorp vs. Banco del Bajo
Performance |
| Timeline |
| Oak Valley Bancorp |
| Banco del Bajo |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Oak Valley and Banco Del Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oak Valley and Banco Del
The main advantage of trading using opposite Oak Valley and Banco Del positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oak Valley position performs unexpectedly, Banco Del 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 Banco Del will offset losses from the drop in Banco Del's long position.| 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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