Correlation Between National Capital and Oakworth Capital

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

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

Diversification Opportunities for National Capital and Oakworth Capital

-0.49

Correlation Coefficient

National Capital  Oakworth Capital

Very good diversification

The 3 months correlation between National and Oakworth is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding National Capital Bank and Oakworth Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakworth Capital and National Capital 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 National Capital Bank are associated (or correlated) with Oakworth Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakworth Capital has no effect on the direction of National Capital i.e., National Capital and Oakworth Capital go up and down completely randomly.

Pair Corralation between National Capital and Oakworth Capital

Given the investment horizon of 90 days National Capital Bank is expected to under-perform the Oakworth Capital. In addition to that, National Capital is 3.68 times more volatile than Oakworth Capital. It trades about -0.02 of its total potential returns per unit of risk. Oakworth Capital is currently generating about 0.03 per unit of volatility. If you would invest  3,150  in Oakworth Capital on December 22, 2024 and sell it today you would earn a total of  50.00  from holding Oakworth Capital or generate 1.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.75%
Values	Daily Returns

National Capital Bank  vs.  Oakworth Capital

National Capital Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days National Capital Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, National Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Oakworth Capital

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oakworth Capital are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward-looking signals, Oakworth Capital is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with National Capital and Oakworth Capital

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

The idea behind National Capital Bank and Oakworth Capital 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.