Correlation Between Bank Ozk and IA Financial

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

By analyzing existing cross correlation between Bank Ozk and iA Financial, you can compare the effects of market volatilities on Bank Ozk and IA Financial 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 IA Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Ozk and IA Financial.

Diversification Opportunities for Bank Ozk and IA Financial

0.3

Correlation Coefficient

Bank Ozk  IA Financial

Weak diversification

The 3 months correlation between Bank and IAFNF is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Bank Ozk and iA Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iA Financial 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 IA Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iA Financial has no effect on the direction of Bank Ozk i.e., Bank Ozk and IA Financial go up and down completely randomly.

Pair Corralation between Bank Ozk and IA Financial

Considering the 90-day investment horizon Bank Ozk is expected to generate 1.34 times more return on investment than IA Financial. However, Bank Ozk is 1.34 times more volatile than iA Financial. It trades about 0.02 of its potential returns per unit of risk. iA Financial is currently generating about -0.02 per unit of risk. If you would invest  4,413  in Bank Ozk on December 27, 2024 and sell it today you would earn a total of  84.00  from holding Bank Ozk or generate 1.9% return on investment over 90 days.

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

Bank Ozk  vs.  iA Financial

Bank Ozk

Risk-Adjusted Performance

Weak

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

iA Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days iA Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, IA Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Bank Ozk and IA Financial

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

The idea behind Bank Ozk and iA Financial 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.