Correlation Between Old Point and CB Financial
Can any of the company-specific risk be diversified away by investing in both Old Point and CB Financial 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 CB Financial 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 CB Financial Services, you can compare the effects of market volatilities on Old Point and CB Financial 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 CB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Point and CB Financial.
Diversification Opportunities for Old Point and CB Financial
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Old and CBFV is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Old Point Financial and CB Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CB Financial Services 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 CB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CB Financial Services has no effect on the direction of Old Point i.e., Old Point and CB Financial go up and down completely randomly.
Pair Corralation between Old Point and CB Financial
Given the investment horizon of 90 days Old Point is expected to generate 1.04 times less return on investment than CB Financial. In addition to that, Old Point is 1.36 times more volatile than CB Financial Services. It trades about 0.06 of its total potential returns per unit of risk. CB Financial Services is currently generating about 0.09 per unit of volatility. If you would invest 1,982 in CB Financial Services on September 1, 2024 and sell it today you would earn a total of 1,217 from holding CB Financial Services or generate 61.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.46% |
| Values | Daily Returns |
Old Point Financial vs. CB Financial Services
Performance |
| Timeline |
| Old Point Financial |
| CB Financial Services |
Old Point and CB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Point and CB Financial
The main advantage of trading using opposite Old Point and CB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Point position performs unexpectedly, CB Financial 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 CB Financial will offset losses from the drop in CB Financial's long position.| Old Point vs. Affinity Bancshares | Old Point vs. Southern California Bancorp | Old Point vs. Auburn National Bancorporation | Old Point vs. BayCom Corp |
| CB Financial vs. Magyar Bancorp | CB Financial vs. Home Federal Bancorp | CB Financial vs. Community West Bancshares | CB Financial vs. Lake Shore Bancorp |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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