Correlation Between ST Bancorp and Oak Valley
Can any of the company-specific risk be diversified away by investing in both ST Bancorp and Oak 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 ST Bancorp and Oak Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ST Bancorp and Oak Valley Bancorp, you can compare the effects of market volatilities on ST Bancorp and Oak 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 ST Bancorp with a short position of Oak Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of ST Bancorp and Oak Valley.
Diversification Opportunities for ST Bancorp and Oak Valley
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between STBA and Oak is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding ST Bancorp and Oak Valley Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oak Valley Bancorp and ST 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 ST Bancorp are associated (or correlated) with Oak Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oak Valley Bancorp has no effect on the direction of ST Bancorp i.e., ST Bancorp and Oak Valley go up and down completely randomly.
Pair Corralation between ST Bancorp and Oak Valley
Given the investment horizon of 90 days ST Bancorp is expected to generate 1.46 times more return on investment than Oak Valley. However, ST Bancorp is 1.46 times more volatile than Oak Valley Bancorp. It trades about 0.18 of its potential returns per unit of risk. Oak Valley Bancorp is currently generating about 0.26 per unit of risk. If you would invest 3,843 in ST Bancorp on August 29, 2024 and sell it today you would earn a total of 510.00 from holding ST Bancorp or generate 13.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ST Bancorp vs. Oak Valley Bancorp
Performance |
| Timeline |
| ST Bancorp |
| Oak Valley Bancorp |
ST Bancorp and Oak Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ST Bancorp and Oak Valley
The main advantage of trading using opposite ST Bancorp and Oak Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ST Bancorp position performs unexpectedly, Oak 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 Oak Valley will offset losses from the drop in Oak Valley's long position.| ST Bancorp vs. CrossFirst Bankshares | ST Bancorp vs. Enterprise Financial Services | ST Bancorp vs. The First Bancshares, | ST Bancorp vs. First Bancorp |
| Oak Valley vs. Fifth Third Bancorp | Oak Valley vs. Huntington Bancshares Incorporated | Oak Valley vs. MT Bank |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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