Correlation Between Oak Valley and FS Bancorp
Can any of the company-specific risk be diversified away by investing in both Oak Valley and FS 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 FS 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 FS Bancorp, you can compare the effects of market volatilities on Oak Valley and FS 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 FS Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oak Valley and FS Bancorp.
Diversification Opportunities for Oak Valley and FS Bancorp
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Oak and FSBW is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Oak Valley Bancorp and FS Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FS 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 FS Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FS Bancorp has no effect on the direction of Oak Valley i.e., Oak Valley and FS Bancorp go up and down completely randomly.
Pair Corralation between Oak Valley and FS Bancorp
Given the investment horizon of 90 days Oak Valley Bancorp is expected to under-perform the FS Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, Oak Valley Bancorp is 1.41 times less risky than FS Bancorp. The stock trades about -0.16 of its potential returns per unit of risk. The FS Bancorp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 4,015 in FS Bancorp on November 3, 2024 and sell it today you would earn a total of 29.00 from holding FS Bancorp or generate 0.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oak Valley Bancorp vs. FS Bancorp
Performance |
| Timeline |
| Oak Valley Bancorp |
| FS Bancorp |
Oak Valley and FS Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oak Valley and FS Bancorp
The main advantage of trading using opposite Oak Valley and FS Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oak Valley position performs unexpectedly, FS 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 FS Bancorp will offset losses from the drop in FS Bancorp'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 |
| FS Bancorp vs. First Community | FS Bancorp vs. Oak Valley Bancorp | FS Bancorp vs. First Financial Northwest | FS 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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