Correlation Between Oconee Financial and Pacific West

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

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

Diversification Opportunities for Oconee Financial and Pacific West

-0.21

Correlation Coefficient

Oconee Financial  Pacific West

Very good diversification

The 3 months correlation between Oconee and Pacific is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Oconee Financial and Pacific West Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific West Bancorp and Oconee Financial 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 Oconee Financial are associated (or correlated) with Pacific West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific West Bancorp has no effect on the direction of Oconee Financial i.e., Oconee Financial and Pacific West go up and down completely randomly.

Pair Corralation between Oconee Financial and Pacific West

Given the investment horizon of 90 days Oconee Financial is expected to generate 0.56 times more return on investment than Pacific West. However, Oconee Financial is 1.77 times less risky than Pacific West. It trades about 0.02 of its potential returns per unit of risk. Pacific West Bancorp is currently generating about -0.05 per unit of risk. If you would invest  3,893  in Oconee Financial on December 20, 2024 and sell it today you would earn a total of  32.00  from holding Oconee Financial or generate 0.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.72%
Values	Daily Returns

Oconee Financial  vs.  Pacific West Bancorp

Oconee Financial

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oconee Financial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, Oconee Financial is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pacific West Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pacific West Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Oconee Financial and Pacific West

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

The idea behind Oconee Financial and Pacific West 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.