Correlation Between Peapack Gladstone and Ohio Valley
Can any of the company-specific risk be diversified away by investing in both Peapack Gladstone and Ohio Valley 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 Peapack Gladstone and Ohio Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Peapack Gladstone Financial and Ohio Valley Banc, you can compare the effects of market volatilities on Peapack Gladstone and Ohio Valley 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 Peapack Gladstone with a short position of Ohio Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peapack Gladstone and Ohio Valley.
Diversification Opportunities for Peapack Gladstone and Ohio Valley
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Peapack and Ohio is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Peapack Gladstone Financial and Ohio Valley Banc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ohio Valley Banc and Peapack Gladstone 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 Peapack Gladstone Financial are associated (or correlated) with Ohio Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ohio Valley Banc has no effect on the direction of Peapack Gladstone i.e., Peapack Gladstone and Ohio Valley go up and down completely randomly.
Pair Corralation between Peapack Gladstone and Ohio Valley
Considering the 90-day investment horizon Peapack Gladstone is expected to generate 1.33 times less return on investment than Ohio Valley. In addition to that, Peapack Gladstone is 1.2 times more volatile than Ohio Valley Banc. It trades about 0.15 of its total potential returns per unit of risk. Ohio Valley Banc is currently generating about 0.24 per unit of volatility. If you would invest 2,375 in Ohio Valley Banc on August 29, 2024 and sell it today you would earn a total of 361.00 from holding Ohio Valley Banc or generate 15.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Peapack Gladstone Financial vs. Ohio Valley Banc
Performance |
| Timeline |
| Peapack Gladstone |
| Ohio Valley Banc |
Peapack Gladstone and Ohio Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Peapack Gladstone and Ohio Valley
The main advantage of trading using opposite Peapack Gladstone and Ohio Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peapack Gladstone position performs unexpectedly, Ohio Valley 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 Ohio Valley will offset losses from the drop in Ohio Valley's long position.The idea behind Peapack Gladstone Financial and Ohio Valley Banc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Ohio Valley vs. Home Federal Bancorp | Ohio Valley vs. Lake Shore Bancorp | Ohio Valley vs. Community West Bancshares | Ohio 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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