Correlation Between Bank Ozk and Auckland International

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

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

Diversification Opportunities for Bank Ozk and Auckland International

-0.62

Correlation Coefficient

Bank Ozk  Auckland International

Excellent diversification

The 3 months correlation between Bank and Auckland is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Bank Ozk and Auckland International Airport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auckland International and Bank Ozk 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 Bank Ozk are associated (or correlated) with Auckland International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auckland International has no effect on the direction of Bank Ozk i.e., Bank Ozk and Auckland International go up and down completely randomly.

Pair Corralation between Bank Ozk and Auckland International

Considering the 90-day investment horizon Bank Ozk is expected to generate 0.96 times more return on investment than Auckland International. However, Bank Ozk is 1.04 times less risky than Auckland International. It trades about 0.12 of its potential returns per unit of risk. Auckland International Airport is currently generating about -0.04 per unit of risk. If you would invest  4,220  in Bank Ozk on September 2, 2024 and sell it today you would earn a total of  777.00  from holding Bank Ozk or generate 18.41% return on investment over 90 days.

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

Bank Ozk  vs.  Auckland International Airport

Bank Ozk

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Ozk are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Bank Ozk disclosed solid returns over the last few months and may actually be approaching a breakup point.

Auckland International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Auckland International Airport has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Auckland International is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bank Ozk and Auckland International

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

The idea behind Bank Ozk and Auckland International Airport 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.