Correlation Between Washington Federal and Bank Ozk
Can any of the company-specific risk be diversified away by investing in both Washington Federal and Bank Ozk 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 Washington Federal and Bank Ozk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Washington Federal and Bank Ozk Preferred, you can compare the effects of market volatilities on Washington Federal and Bank Ozk 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 Washington Federal with a short position of Bank Ozk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Federal and Bank Ozk.
Diversification Opportunities for Washington Federal and Bank Ozk
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Washington and Bank is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Washington Federal and Bank Ozk Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Ozk Preferred and Washington Federal 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 Washington Federal are associated (or correlated) with Bank Ozk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Ozk Preferred has no effect on the direction of Washington Federal i.e., Washington Federal and Bank Ozk go up and down completely randomly.
Pair Corralation between Washington Federal and Bank Ozk
Assuming the 90 days horizon Washington Federal is expected to under-perform the Bank Ozk. In addition to that, Washington Federal is 1.02 times more volatile than Bank Ozk Preferred. It trades about -0.18 of its total potential returns per unit of risk. Bank Ozk Preferred is currently generating about -0.13 per unit of volatility. If you would invest 1,832 in Bank Ozk Preferred on August 28, 2024 and sell it today you would lose (123.00) from holding Bank Ozk Preferred or give up 6.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Washington Federal vs. Bank Ozk Preferred
Performance |
| Timeline |
| Washington Federal |
| Bank Ozk Preferred |
Washington Federal and Bank Ozk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Federal and Bank Ozk
The main advantage of trading using opposite Washington Federal and Bank Ozk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Federal position performs unexpectedly, Bank Ozk 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 Bank Ozk will offset losses from the drop in Bank Ozk's long position.| Washington Federal vs. Capital One Financial | Washington Federal vs. Capital One Financial | Washington Federal vs. Bank of America |
| Bank Ozk vs. Regions Financial | Bank Ozk vs. Huntington Bancshares Incorporated | Bank Ozk vs. Texas Capital Bancshares | Bank Ozk vs. Washington Federal |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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