Correlation Between Oak Valley and Financial Institutions
Can any of the company-specific risk be diversified away by investing in both Oak Valley and Financial Institutions 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 Financial Institutions 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 Financial Institutions, you can compare the effects of market volatilities on Oak Valley and Financial Institutions 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 Financial Institutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oak Valley and Financial Institutions.
Diversification Opportunities for Oak Valley and Financial Institutions
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Oak and Financial is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Oak Valley Bancorp and Financial Institutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Institutions 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 Financial Institutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Institutions has no effect on the direction of Oak Valley i.e., Oak Valley and Financial Institutions go up and down completely randomly.
Pair Corralation between Oak Valley and Financial Institutions
Given the investment horizon of 90 days Oak Valley is expected to generate 1.06 times less return on investment than Financial Institutions. But when comparing it to its historical volatility, Oak Valley Bancorp is 1.49 times less risky than Financial Institutions. It trades about 0.29 of its potential returns per unit of risk. Financial Institutions is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,454 in Financial Institutions on August 28, 2024 and sell it today you would earn a total of 367.00 from holding Financial Institutions or generate 14.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Oak Valley Bancorp vs. Financial Institutions
Performance |
| Timeline |
| Oak Valley Bancorp |
| Financial Institutions |
Oak Valley and Financial Institutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oak Valley and Financial Institutions
The main advantage of trading using opposite Oak Valley and Financial Institutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oak Valley position performs unexpectedly, Financial Institutions 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 Financial Institutions will offset losses from the drop in Financial Institutions' long position.| Oak Valley vs. Fifth Third Bancorp | Oak Valley vs. Huntington Bancshares Incorporated | Oak Valley vs. Comerica | Oak Valley vs. MT Bank |
| Financial Institutions vs. Fifth Third Bancorp | Financial Institutions vs. Huntington Bancshares Incorporated | Financial Institutions vs. Comerica | Financial Institutions 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Transaction History View history of all your transactions and understand their impact on performance |