Correlation Between Potomac Bancshares and Oregon Pacific
Can any of the company-specific risk be diversified away by investing in both Potomac Bancshares and Oregon Pacific 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 Potomac Bancshares and Oregon Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Potomac Bancshares and Oregon Pacific Bancorp, you can compare the effects of market volatilities on Potomac Bancshares and Oregon Pacific 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 Potomac Bancshares with a short position of Oregon Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Potomac Bancshares and Oregon Pacific.
Diversification Opportunities for Potomac Bancshares and Oregon Pacific
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Potomac and Oregon is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Potomac Bancshares and Oregon Pacific Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oregon Pacific Bancorp and Potomac Bancshares 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 Potomac Bancshares are associated (or correlated) with Oregon Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oregon Pacific Bancorp has no effect on the direction of Potomac Bancshares i.e., Potomac Bancshares and Oregon Pacific go up and down completely randomly.
Pair Corralation between Potomac Bancshares and Oregon Pacific
Given the investment horizon of 90 days Potomac Bancshares is expected to generate 1.86 times more return on investment than Oregon Pacific. However, Potomac Bancshares is 1.86 times more volatile than Oregon Pacific Bancorp. It trades about 0.26 of its potential returns per unit of risk. Oregon Pacific Bancorp is currently generating about 0.05 per unit of risk. If you would invest 1,413 in Potomac Bancshares on September 1, 2024 and sell it today you would earn a total of 237.00 from holding Potomac Bancshares or generate 16.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Potomac Bancshares vs. Oregon Pacific Bancorp
Performance |
| Timeline |
| Potomac Bancshares |
| Oregon Pacific Bancorp |
Potomac Bancshares and Oregon Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Potomac Bancshares and Oregon Pacific
The main advantage of trading using opposite Potomac Bancshares and Oregon Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Potomac Bancshares position performs unexpectedly, Oregon Pacific 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 Oregon Pacific will offset losses from the drop in Oregon Pacific's long position.| Potomac Bancshares vs. Apollo Bancorp | Potomac Bancshares vs. The Farmers Bank | Potomac Bancshares vs. Community Bankers | Potomac Bancshares vs. CCSB Financial Corp |
| Oregon Pacific vs. 1ST SUMMIT BANCORP | Oregon Pacific vs. Apollo Bancorp | Oregon Pacific vs. The Farmers Bank | Oregon Pacific vs. Old National 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |