Correlation Between Bank Ozk and Texas Capital
Can any of the company-specific risk be diversified away by investing in both Bank Ozk and Texas Capital 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 Bank Ozk and Texas Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Ozk Preferred and Texas Capital Bancshares, you can compare the effects of market volatilities on Bank Ozk and Texas Capital 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 Bank Ozk with a short position of Texas Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Ozk and Texas Capital.
Diversification Opportunities for Bank Ozk and Texas Capital
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bank and Texas is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Bank Ozk Preferred and Texas Capital Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Capital Bancshares and Bank Ozk 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 Bank Ozk Preferred are associated (or correlated) with Texas Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Capital Bancshares has no effect on the direction of Bank Ozk i.e., Bank Ozk and Texas Capital go up and down completely randomly.
Pair Corralation between Bank Ozk and Texas Capital
Assuming the 90 days horizon Bank Ozk Preferred is expected to under-perform the Texas Capital. In addition to that, Bank Ozk is 1.18 times more volatile than Texas Capital Bancshares. It trades about -0.25 of its total potential returns per unit of risk. Texas Capital Bancshares is currently generating about -0.15 per unit of volatility. If you would invest 2,169 in Texas Capital Bancshares on August 28, 2024 and sell it today you would lose (90.00) from holding Texas Capital Bancshares or give up 4.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Ozk Preferred vs. Texas Capital Bancshares
Performance |
| Timeline |
| Bank Ozk Preferred |
| Texas Capital Bancshares |
Bank Ozk and Texas Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Ozk and Texas Capital
The main advantage of trading using opposite Bank Ozk and Texas Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Ozk position performs unexpectedly, Texas Capital 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 Texas Capital will offset losses from the drop in Texas Capital's long position.| Bank Ozk vs. Regions Financial | Bank Ozk vs. Huntington Bancshares Incorporated | Bank Ozk vs. Texas Capital Bancshares | Bank Ozk vs. Washington Federal |
| Texas Capital vs. Washington Federal | Texas Capital vs. First Citizens BancShares | Texas Capital vs. Dime Community Bancshares | Texas Capital vs. Pinnacle Financial Partners |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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