Correlation Between Oak Valley and Ames National

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

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

Diversification Opportunities for Oak Valley and Ames National

-0.11

Correlation Coefficient

Oak Valley  Ames National

Good diversification

The 3 months correlation between Oak and Ames is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Oak Valley Bancorp and Ames National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ames National and Oak Valley 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 Valley Bancorp are associated (or correlated) with Ames National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ames National has no effect on the direction of Oak Valley i.e., Oak Valley and Ames National go up and down completely randomly.

Pair Corralation between Oak Valley and Ames National

Given the investment horizon of 90 days Oak Valley Bancorp is expected to generate 1.1 times more return on investment than Ames National. However, Oak Valley is 1.1 times more volatile than Ames National. It trades about 0.04 of its potential returns per unit of risk. Ames National is currently generating about -0.01 per unit of risk. If you would invest  2,170  in Oak Valley Bancorp on September 14, 2024 and sell it today you would earn a total of  867.00  from holding Oak Valley Bancorp or generate 39.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Oak Valley Bancorp  vs.  Ames National

Oak Valley Bancorp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oak Valley Bancorp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting essential indicators, Oak Valley showed solid returns over the last few months and may actually be approaching a breakup point.

Ames National

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ames National has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Oak Valley and Ames National

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

The idea behind Oak Valley Bancorp and Ames National 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.