Correlation Between Bank Ozk and ADVOCATE

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

By analyzing existing cross correlation between Bank Ozk and ADVOCATE HEALTH HOSPS, you can compare the effects of market volatilities on Bank Ozk and ADVOCATE 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 Ozk with a short position of ADVOCATE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Ozk and ADVOCATE.

Diversification Opportunities for Bank Ozk and ADVOCATE

-0.36

Correlation Coefficient

Bank Ozk  ADVOCATE

Very good diversification

The 3 months correlation between Bank and ADVOCATE is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Bank Ozk and ADVOCATE HEALTH HOSPS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADVOCATE HEALTH HOSPS and Bank Ozk 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 Ozk are associated (or correlated) with ADVOCATE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADVOCATE HEALTH HOSPS has no effect on the direction of Bank Ozk i.e., Bank Ozk and ADVOCATE go up and down completely randomly.

Pair Corralation between Bank Ozk and ADVOCATE

Considering the 90-day investment horizon Bank Ozk is expected to generate 1.07 times more return on investment than ADVOCATE. However, Bank Ozk is 1.07 times more volatile than ADVOCATE HEALTH HOSPS. It trades about 0.13 of its potential returns per unit of risk. ADVOCATE HEALTH HOSPS is currently generating about -0.06 per unit of risk. If you would invest  3,928  in Bank Ozk on September 11, 2024 and sell it today you would earn a total of  794.00  from holding Bank Ozk or generate 20.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	48.44%
Values	Daily Returns

Bank Ozk  vs.  ADVOCATE HEALTH HOSPS

Bank Ozk

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Ozk are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Bank Ozk disclosed solid returns over the last few months and may actually be approaching a breakup point.

ADVOCATE HEALTH HOSPS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ADVOCATE HEALTH HOSPS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for ADVOCATE HEALTH HOSPS investors.

Pair Trading with Bank Ozk and ADVOCATE

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

The idea behind Bank Ozk and ADVOCATE HEALTH HOSPS 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.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.