Correlation Between Affinity Bancshares and Old Second
Can any of the company-specific risk be diversified away by investing in both Affinity Bancshares and Old Second 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 Affinity Bancshares and Old Second into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Affinity Bancshares and Old Second Bancorp, you can compare the effects of market volatilities on Affinity Bancshares and Old Second 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 Affinity Bancshares with a short position of Old Second. Check out your portfolio center. Please also check ongoing floating volatility patterns of Affinity Bancshares and Old Second.
Diversification Opportunities for Affinity Bancshares and Old Second
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Affinity and Old is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Affinity Bancshares and Old Second Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Second Bancorp and Affinity 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 Affinity Bancshares are associated (or correlated) with Old Second. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Second Bancorp has no effect on the direction of Affinity Bancshares i.e., Affinity Bancshares and Old Second go up and down completely randomly.
Pair Corralation between Affinity Bancshares and Old Second
Given the investment horizon of 90 days Affinity Bancshares is expected to generate 1.07 times less return on investment than Old Second. But when comparing it to its historical volatility, Affinity Bancshares is 1.05 times less risky than Old Second. It trades about 0.11 of its potential returns per unit of risk. Old Second Bancorp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,356 in Old Second Bancorp on September 3, 2024 and sell it today you would earn a total of 504.00 from holding Old Second Bancorp or generate 37.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Affinity Bancshares vs. Old Second Bancorp
Performance |
| Timeline |
| Affinity Bancshares |
| Old Second Bancorp |
Affinity Bancshares and Old Second Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Affinity Bancshares and Old Second
The main advantage of trading using opposite Affinity Bancshares and Old Second positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Affinity Bancshares position performs unexpectedly, Old Second 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 Old Second will offset losses from the drop in Old Second's long position.| Affinity Bancshares vs. Home Federal Bancorp | Affinity Bancshares vs. Magyar Bancorp | Affinity Bancshares vs. Community West Bancshares |
| Old Second vs. Ohio Valley Banc | Old Second vs. Peoples Bancorp | Old Second vs. OceanFirst Financial Corp | Old Second vs. QCR Holdings |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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