Correlation Between Huntington Bancshares and Oak Valley
Can any of the company-specific risk be diversified away by investing in both Huntington Bancshares and Oak Valley 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 Huntington Bancshares and Oak Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Huntington Bancshares Incorporated and Oak Valley Bancorp, you can compare the effects of market volatilities on Huntington Bancshares and Oak Valley 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 Huntington Bancshares with a short position of Oak Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huntington Bancshares and Oak Valley.
Diversification Opportunities for Huntington Bancshares and Oak Valley
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Huntington and Oak is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Huntington Bancshares Incorpor and Oak Valley Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oak Valley Bancorp and Huntington Bancshares 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 Huntington Bancshares Incorporated are associated (or correlated) with Oak Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oak Valley Bancorp has no effect on the direction of Huntington Bancshares i.e., Huntington Bancshares and Oak Valley go up and down completely randomly.
Pair Corralation between Huntington Bancshares and Oak Valley
Given the investment horizon of 90 days Huntington Bancshares Incorporated is expected to generate 0.66 times more return on investment than Oak Valley. However, Huntington Bancshares Incorporated is 1.52 times less risky than Oak Valley. It trades about 0.08 of its potential returns per unit of risk. Oak Valley Bancorp is currently generating about -0.05 per unit of risk. If you would invest 1,330 in Huntington Bancshares Incorporated on February 8, 2024 and sell it today you would earn a total of 55.00 from holding Huntington Bancshares Incorporated or generate 4.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Huntington Bancshares Incorpor vs. Oak Valley Bancorp
Performance |
Timeline |
Huntington Bancshares |
Oak Valley Bancorp |
Huntington Bancshares and Oak Valley Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Huntington Bancshares and Oak Valley
The main advantage of trading using opposite Huntington Bancshares and Oak Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huntington Bancshares position performs unexpectedly, Oak Valley 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 Oak Valley will offset losses from the drop in Oak Valley's long position.The idea behind Huntington Bancshares Incorporated and Oak Valley 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.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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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