Correlation Between Oak Valley and First Guaranty

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

By analyzing existing cross correlation between Oak Valley Bancorp and First Guaranty Bancshares, you can compare the effects of market volatilities on Oak Valley and First Guaranty 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 Oak Valley with a short position of First Guaranty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oak Valley and First Guaranty.

Diversification Opportunities for Oak Valley and First Guaranty

-0.26

Correlation Coefficient

Oak Valley  First Guaranty

Very good diversification

The 3 months correlation between Oak and First is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Oak Valley Bancorp and First Guaranty Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Guaranty Bancshares and Oak Valley 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 Oak Valley Bancorp are associated (or correlated) with First Guaranty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Guaranty Bancshares has no effect on the direction of Oak Valley i.e., Oak Valley and First Guaranty go up and down completely randomly.

Pair Corralation between Oak Valley and First Guaranty

Given the investment horizon of 90 days Oak Valley Bancorp is expected to generate 0.74 times more return on investment than First Guaranty. However, Oak Valley Bancorp is 1.35 times less risky than First Guaranty. It trades about 0.07 of its potential returns per unit of risk. First Guaranty Bancshares is currently generating about -0.07 per unit of risk. If you would invest  2,466  in Oak Valley Bancorp on May 6, 2025 and sell it today you would earn a total of  173.00  from holding Oak Valley Bancorp or generate 7.02% return on investment over 90 days.

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

Oak Valley Bancorp  vs.  First Guaranty Bancshares

Oak Valley Bancorp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Oak Valley Bancorp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady essential indicators, Oak Valley may actually be approaching a critical reversion point that can send shares even higher in September 2025.

First Guaranty Bancshares

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Guaranty Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Oak Valley and First Guaranty

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

The idea behind Oak Valley Bancorp and First Guaranty Bancshares 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.