Correlation Between Old Point and Berkshire Hills
Can any of the company-specific risk be diversified away by investing in both Old Point and Berkshire Hills 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 Berkshire Hills 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 Berkshire Hills Bancorp, you can compare the effects of market volatilities on Old Point and Berkshire Hills 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 Berkshire Hills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Point and Berkshire Hills.
Diversification Opportunities for Old Point and Berkshire Hills
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Old and Berkshire is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Old Point Financial and Berkshire Hills Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hills Bancorp 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 Berkshire Hills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkshire Hills Bancorp has no effect on the direction of Old Point i.e., Old Point and Berkshire Hills go up and down completely randomly.
Pair Corralation between Old Point and Berkshire Hills
Given the investment horizon of 90 days Old Point is expected to generate 1.03 times less return on investment than Berkshire Hills. But when comparing it to its historical volatility, Old Point Financial is 2.75 times less risky than Berkshire Hills. It trades about 0.48 of its potential returns per unit of risk. Berkshire Hills Bancorp is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,690 in Berkshire Hills Bancorp on September 5, 2024 and sell it today you would earn a total of 342.00 from holding Berkshire Hills Bancorp or generate 12.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Point Financial vs. Berkshire Hills Bancorp
Performance |
| Timeline |
| Old Point Financial |
| Berkshire Hills Bancorp |
Old Point and Berkshire Hills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Point and Berkshire Hills
The main advantage of trading using opposite Old Point and Berkshire Hills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Point position performs unexpectedly, Berkshire Hills 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 Berkshire Hills will offset losses from the drop in Berkshire Hills' long position.| Old Point vs. First Community | Old Point vs. Oak Valley Bancorp | Old Point vs. Chemung Financial Corp | Old Point vs. Home Bancorp |
| Berkshire Hills vs. International Bancshares | Berkshire Hills vs. Finward Bancorp | Berkshire Hills vs. Aquagold International | Berkshire Hills vs. Thrivent High Yield |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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