Correlation Between Oak Ridge and Greenville Federal

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

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

Diversification Opportunities for Oak Ridge and Greenville Federal

-0.7

Correlation Coefficient

Oak Ridge  Greenville Federal

Excellent diversification

The 3 months correlation between Oak and Greenville is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Oak Ridge Financial and Greenville Federal Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenville Federal and Oak Ridge 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 Oak Ridge Financial are associated (or correlated) with Greenville Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenville Federal has no effect on the direction of Oak Ridge i.e., Oak Ridge and Greenville Federal go up and down completely randomly.

Pair Corralation between Oak Ridge and Greenville Federal

Given the investment horizon of 90 days Oak Ridge Financial is expected to generate 0.94 times more return on investment than Greenville Federal. However, Oak Ridge Financial is 1.07 times less risky than Greenville Federal. It trades about 0.14 of its potential returns per unit of risk. Greenville Federal Financial is currently generating about -0.21 per unit of risk. If you would invest  2,025  in Oak Ridge Financial on September 21, 2024 and sell it today you would earn a total of  35.00  from holding Oak Ridge Financial or generate 1.73% return on investment over 90 days.

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

Oak Ridge Financial  vs.  Greenville Federal Financial

Oak Ridge Financial

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oak Ridge Financial are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Oak Ridge may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Greenville Federal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greenville Federal Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Greenville Federal is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Oak Ridge and Greenville Federal

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

The idea behind Oak Ridge Financial and Greenville 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.

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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.