Correlation Between Old National and Old Second
Can any of the company-specific risk be diversified away by investing in both Old National 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 Old National and Old Second into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old National Bancorp and Old Second Bancorp, you can compare the effects of market volatilities on Old National 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 Old National with a short position of Old Second. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old National and Old Second.
Diversification Opportunities for Old National and Old Second
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Old and Old is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Old National Bancorp 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 Old National 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 Old National Bancorp 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 Old National i.e., Old National and Old Second go up and down completely randomly.
Pair Corralation between Old National and Old Second
Considering the 90-day investment horizon Old National Bancorp is expected to generate 1.07 times more return on investment than Old Second. However, Old National is 1.07 times more volatile than Old Second Bancorp. It trades about 0.09 of its potential returns per unit of risk. Old Second Bancorp is currently generating about 0.06 per unit of risk. If you would invest 1,317 in Old National Bancorp on September 2, 2024 and sell it today you would earn a total of 999.00 from holding Old National Bancorp or generate 75.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old National Bancorp vs. Old Second Bancorp
Performance |
| Timeline |
| Old National Bancorp |
| Old Second Bancorp |
Old National and Old Second Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old National and Old Second
The main advantage of trading using opposite Old National and Old Second positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old National 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.| Old National vs. Independent Bank | Old National vs. First Financial Bancorp | Old National vs. Lakeland Financial | Old National vs. National Bank Holdings |
| 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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