Correlation Between Norwood Financial and Ohio Valley

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

By analyzing existing cross correlation between Norwood Financial Corp and Ohio Valley Banc, you can compare the effects of market volatilities on Norwood Financial and Ohio 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 Norwood Financial with a short position of Ohio Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwood Financial and Ohio Valley.

Diversification Opportunities for Norwood Financial and Ohio Valley

0.32

Correlation Coefficient

Norwood Financial  Ohio Valley

Weak diversification

The 3 months correlation between Norwood and Ohio is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Norwood Financial Corp and Ohio Valley Banc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ohio Valley Banc and Norwood Financial 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 Norwood Financial Corp are associated (or correlated) with Ohio Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ohio Valley Banc has no effect on the direction of Norwood Financial i.e., Norwood Financial and Ohio Valley go up and down completely randomly.

Pair Corralation between Norwood Financial and Ohio Valley

Given the investment horizon of 90 days Norwood Financial Corp is expected to under-perform the Ohio Valley. But the stock apears to be less risky and, when comparing its historical volatility, Norwood Financial Corp is 1.45 times less risky than Ohio Valley. The stock trades about -0.04 of its potential returns per unit of risk. The Ohio Valley Banc is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  3,484  in Ohio Valley Banc on May 7, 2025 and sell it today you would lose (43.00) from holding Ohio Valley Banc or give up 1.23% of portfolio value over 90 days.

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

Norwood Financial Corp  vs.  Ohio Valley Banc

Norwood Financial Corp

Risk-Adjusted Performance

Weakest

Over the last 90 days Norwood Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Norwood Financial is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Ohio Valley Banc

Risk-Adjusted Performance

Weakest

Over the last 90 days Ohio Valley Banc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Ohio Valley is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Norwood Financial and Ohio Valley

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

The idea behind Norwood Financial Corp and Ohio Valley Banc 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.