Correlation Between Sierra Bancorp and Oconee Federal

Can any of the company-specific risk be diversified away by investing in both Sierra Bancorp and Oconee Federal 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 Sierra Bancorp and Oconee Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sierra Bancorp and Oconee Federal Financial, you can compare the effects of market volatilities on Sierra Bancorp and Oconee Federal 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 Sierra Bancorp with a short position of Oconee Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sierra Bancorp and Oconee Federal.

Diversification Opportunities for Sierra Bancorp and Oconee Federal

-0.29

Correlation Coefficient

Sierra Bancorp  Oconee Federal

Very good diversification

The 3 months correlation between Sierra and Oconee is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Sierra Bancorp and Oconee Federal Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oconee Federal Financial and Sierra 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 Sierra Bancorp are associated (or correlated) with Oconee Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oconee Federal Financial has no effect on the direction of Sierra Bancorp i.e., Sierra Bancorp and Oconee Federal go up and down completely randomly.

Pair Corralation between Sierra Bancorp and Oconee Federal

Given the investment horizon of 90 days Sierra Bancorp is expected to generate 0.82 times more return on investment than Oconee Federal. However, Sierra Bancorp is 1.22 times less risky than Oconee Federal. It trades about 0.05 of its potential returns per unit of risk. Oconee Federal Financial is currently generating about -0.1 per unit of risk. If you would invest  2,024  in Sierra Bancorp on September 1, 2024 and sell it today you would earn a total of  1,123  from holding Sierra Bancorp or generate 55.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	31.11%
Values	Daily Returns

Sierra Bancorp  vs.  Oconee Federal Financial

Sierra Bancorp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sierra Bancorp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Sierra Bancorp may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Oconee Federal Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oconee Federal Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Oconee Federal is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Sierra Bancorp and Oconee Federal

The main advantage of trading using opposite Sierra Bancorp and Oconee Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sierra Bancorp position performs unexpectedly, Oconee Federal 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 Oconee Federal will offset losses from the drop in Oconee Federal's long position.

The idea behind Sierra Bancorp and Oconee Federal Financial 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.