Correlation Between Bank Ozk and Sipp Industries

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

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

Diversification Opportunities for Bank Ozk and Sipp Industries

-0.6

Correlation Coefficient

Bank Ozk  Sipp Industries

Excellent diversification

The 3 months correlation between Bank and Sipp is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bank Ozk and Sipp Industries New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sipp Industries New 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 Sipp Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sipp Industries New has no effect on the direction of Bank Ozk i.e., Bank Ozk and Sipp Industries go up and down completely randomly.

Pair Corralation between Bank Ozk and Sipp Industries

Considering the 90-day investment horizon Bank Ozk is expected to generate 2.96 times less return on investment than Sipp Industries. But when comparing it to its historical volatility, Bank Ozk is 7.48 times less risky than Sipp Industries. It trades about 0.17 of its potential returns per unit of risk. Sipp Industries New is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  0.10  in Sipp Industries New on September 4, 2024 and sell it today you would lose (0.01) from holding Sipp Industries New or give up 10.0% of portfolio value over 90 days.

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

Bank Ozk  vs.  Sipp Industries New

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.

Sipp Industries New

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sipp Industries New are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Sipp Industries exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Ozk and Sipp Industries

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

The idea behind Bank Ozk and Sipp Industries New 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.