Correlation Between Plumas Bancorp and OptimumBank Holdings
Can any of the company-specific risk be diversified away by investing in both Plumas Bancorp and OptimumBank Holdings 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 Plumas Bancorp and OptimumBank Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plumas Bancorp and OptimumBank Holdings, you can compare the effects of market volatilities on Plumas Bancorp and OptimumBank Holdings 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 Plumas Bancorp with a short position of OptimumBank Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plumas Bancorp and OptimumBank Holdings.
Diversification Opportunities for Plumas Bancorp and OptimumBank Holdings
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Plumas and OptimumBank is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Plumas Bancorp and OptimumBank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OptimumBank Holdings and Plumas Bancorp 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 Plumas Bancorp are associated (or correlated) with OptimumBank Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OptimumBank Holdings has no effect on the direction of Plumas Bancorp i.e., Plumas Bancorp and OptimumBank Holdings go up and down completely randomly.
Pair Corralation between Plumas Bancorp and OptimumBank Holdings
Given the investment horizon of 90 days Plumas Bancorp is expected to generate 0.75 times more return on investment than OptimumBank Holdings. However, Plumas Bancorp is 1.33 times less risky than OptimumBank Holdings. It trades about 0.27 of its potential returns per unit of risk. OptimumBank Holdings is currently generating about -0.05 per unit of risk. If you would invest 4,554 in Plumas Bancorp on September 13, 2024 and sell it today you would earn a total of 331.00 from holding Plumas Bancorp or generate 7.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plumas Bancorp vs. OptimumBank Holdings
Performance |
| Timeline |
| Plumas Bancorp |
| OptimumBank Holdings |
Plumas Bancorp and OptimumBank Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plumas Bancorp and OptimumBank Holdings
The main advantage of trading using opposite Plumas Bancorp and OptimumBank Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plumas Bancorp position performs unexpectedly, OptimumBank Holdings 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 OptimumBank Holdings will offset losses from the drop in OptimumBank Holdings' long position.| Plumas Bancorp vs. Comerica | Plumas Bancorp vs. Truist Financial Corp | Plumas Bancorp vs. Fifth Third Bancorp | Plumas Bancorp vs. Zions Bancorporation |
| OptimumBank Holdings vs. First National Bank | OptimumBank Holdings vs. TrustCo Bank Corp | OptimumBank Holdings vs. Inter Co Class | OptimumBank Holdings vs. Rhinebeck 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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