Correlation Between Investar Holding and Oak Valley

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

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

Diversification Opportunities for Investar Holding and Oak Valley

0.87

Correlation Coefficient

Investar Holding  Oak Valley

Very poor diversification

The 3 months correlation between Investar and Oak is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Investar Holding Corp 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 Investar Holding 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 Investar Holding Corp 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 Investar Holding i.e., Investar Holding and Oak Valley go up and down completely randomly.

Pair Corralation between Investar Holding and Oak Valley

Given the investment horizon of 90 days Investar Holding is expected to generate 1.05 times less return on investment than Oak Valley. In addition to that, Investar Holding is 1.08 times more volatile than Oak Valley Bancorp. It trades about 0.03 of its total potential returns per unit of risk. Oak Valley Bancorp is currently generating about 0.03 per unit of volatility. If you would invest  2,224  in Oak Valley Bancorp on December 2, 2024 and sell it today you would earn a total of  483.00  from holding Oak Valley Bancorp or generate 21.72% return on investment over 90 days.

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

Investar Holding Corp  vs.  Oak Valley Bancorp

Investar Holding Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Investar Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Oak Valley Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oak Valley Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Investar Holding and Oak Valley

The main advantage of trading using opposite Investar Holding and Oak Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investar Holding 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 Investar Holding Corp 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.