Correlation Between Old Point and Ames National
Can any of the company-specific risk be diversified away by investing in both Old Point and Ames National 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 Point and Ames National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Point Financial and Ames National, you can compare the effects of market volatilities on Old Point and Ames National 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 Point with a short position of Ames National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Point and Ames National.
Diversification Opportunities for Old Point and Ames National
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Old and Ames is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Old Point Financial and Ames National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ames National and Old Point 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 Point Financial are associated (or correlated) with Ames National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ames National has no effect on the direction of Old Point i.e., Old Point and Ames National go up and down completely randomly.
Pair Corralation between Old Point and Ames National
Given the investment horizon of 90 days Old Point Financial is expected to generate 0.93 times more return on investment than Ames National. However, Old Point Financial is 1.07 times less risky than Ames National. It trades about 0.06 of its potential returns per unit of risk. Ames National is currently generating about -0.02 per unit of risk. If you would invest 1,748 in Old Point Financial on August 25, 2024 and sell it today you would earn a total of 417.00 from holding Old Point Financial or generate 23.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.69% |
| Values | Daily Returns |
Old Point Financial vs. Ames National
Performance |
| Timeline |
| Old Point Financial |
| Ames National |
Old Point and Ames National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Point and Ames National
The main advantage of trading using opposite Old Point and Ames National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Point position performs unexpectedly, Ames National 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 Ames National will offset losses from the drop in Ames National's long position.| Old Point vs. First Community | Old Point vs. Oak Valley Bancorp | Old Point vs. Chemung Financial Corp | Old Point vs. Home Bancorp |
| Ames National vs. First Community | Ames National vs. Old Point Financial | Ames National vs. Oak Valley Bancorp | Ames National vs. Chemung Financial Corp |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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