Correlation Between Bank Of Princeton and Oak Valley

Can any of the company-specific risk be diversified away by investing in both Bank Of Princeton 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 Bank Of Princeton and Oak Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bank Of Princeton and Oak Valley Bancorp, you can compare the effects of market volatilities on Bank Of Princeton 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 Bank Of Princeton with a short position of Oak Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Of Princeton and Oak Valley.

Diversification Opportunities for Bank Of Princeton and Oak Valley

0.61

Correlation Coefficient

Bank Of Princeton  Oak Valley

Poor diversification

The 3 months correlation between Bank and Oak is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Bank Of Princeton 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 Bank Of Princeton 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 Bank Of Princeton 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 Bank Of Princeton i.e., Bank Of Princeton and Oak Valley go up and down completely randomly.

Pair Corralation between Bank Of Princeton and Oak Valley

Given the investment horizon of 90 days Bank Of Princeton is expected to generate 12.25 times less return on investment than Oak Valley. But when comparing it to its historical volatility, Bank Of Princeton is 1.26 times less risky than Oak Valley. It trades about 0.01 of its potential returns per unit of risk. Oak Valley Bancorp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,645  in Oak Valley Bancorp on September 14, 2024 and sell it today you would earn a total of  346.00  from holding Oak Valley Bancorp or generate 13.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Bank Of Princeton  vs.  Oak Valley Bancorp

Bank Of Princeton

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Of Princeton has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Bank Of Princeton is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Oak Valley Bancorp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oak Valley Bancorp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting essential indicators, Oak Valley showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Of Princeton and Oak Valley

The main advantage of trading using opposite Bank Of Princeton and Oak Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Of Princeton 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.

The idea behind Bank Of Princeton and Oak Valley Bancorp 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.

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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 CEOs Directory module to screen CEOs from public companies around the world.