Correlation Between Oak Valley and Evans Bancorp
Can any of the company-specific risk be diversified away by investing in both Oak Valley and Evans Bancorp 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 Evans Bancorp 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 Evans Bancorp, you can compare the effects of market volatilities on Oak Valley and Evans Bancorp 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 Evans Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oak Valley and Evans Bancorp.
Diversification Opportunities for Oak Valley and Evans Bancorp
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Oak and Evans is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Oak Valley Bancorp and Evans Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evans Bancorp 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 Evans Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evans Bancorp has no effect on the direction of Oak Valley i.e., Oak Valley and Evans Bancorp go up and down completely randomly.
Pair Corralation between Oak Valley and Evans Bancorp
Given the investment horizon of 90 days Oak Valley Bancorp is expected to generate 0.86 times more return on investment than Evans Bancorp. However, Oak Valley Bancorp is 1.16 times less risky than Evans Bancorp. It trades about 0.26 of its potential returns per unit of risk. Evans Bancorp is currently generating about 0.18 per unit of risk. If you would invest 2,719 in Oak Valley Bancorp on August 27, 2024 and sell it today you would earn a total of 352.00 from holding Oak Valley Bancorp or generate 12.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oak Valley Bancorp vs. Evans Bancorp
Performance |
| Timeline |
| Oak Valley Bancorp |
| Evans Bancorp |
Oak Valley and Evans Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oak Valley and Evans Bancorp
The main advantage of trading using opposite Oak Valley and Evans Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oak Valley position performs unexpectedly, Evans Bancorp 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 Evans Bancorp will offset losses from the drop in Evans Bancorp's long position.| Oak Valley vs. Fifth Third Bancorp | Oak Valley vs. Zions Bancorporation | Oak Valley vs. Huntington Bancshares Incorporated | Oak Valley vs. Comerica |
| Evans Bancorp vs. First Community | Evans Bancorp vs. Oak Valley Bancorp | Evans Bancorp vs. First Financial Northwest | Evans Bancorp vs. ESSA 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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